1966-06-16

[Stage Direction]
Mr. Palrick-T. Asselin (Richmond-Wolfe)
presented the first report, in French and in English, of the standing committee on standing orders.
[Stage Direction]
Second and third reports of standing committee on Indian affairs, human rights and citizenship and immigration-Mr. Klein.
First report of standing committee on health and welfare-Mr. Harley.
[Note: Text oj the foregoing reports appears in today's Votes and Proceedings.]


Hon. Lucien Cardin (Minister of Justice) moved: for leave to introduce Bill No. C-201, to amend the Exchequer Court Act.


Some hon. Members:: Explain.


Louis-Joseph-Lucien Cardin: Mr. Speaker, this is a minor amendment to the Exchequer Court Act to permit the taxation stamps to be eliminated.
Motion agreed to and bill read the first time.
[DOT] (2:40 p.m.)



DAIRY COMMISSION


Hon. J. J. Greene (Minister of Agriculture) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to establish a dairy commission for Canada to administer funds made available to it for the purpose of stabilizing the price of milk and cream so as to provide efficient producers of milk and cream with the opportunity of obtaining a fair return for their labour and investment and to provide consumers
of dairy products with a continuous and adequate supply of dairy products of high quality; to provide that all expenditures for the purpose of the said measure, excluding those that in the opinion of the minister are directly attributable to action taken by the commission to stabilize the price of any dairy product, shall be paid out of moneys appropriated by parliament therefor; to provide also for the establishment in the consolidated revenue fund of a special account to be known as the Canadian dairy commission account, for credits and charges thereto; and to provide further for the making of loans to the commission and for the terms and conditions thereof.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the Prime Minister. Because all of us are desirous of doing everything we can to improve the image of parliament, I should like to ask the right hon. gentleman whether on behalf of the government he will consider setting up a special committee of parliament, or using the facilities of an existing committee, to make a study of the possibility of broadcasting a portion of the proceedings of parliament each day over radio and television. This is something, as the Prime Minister is aware, that is receiving attention in the United Kingdom. I have referred to it before, and am strongly in favour of it. Will the Prime Minister consider following that course, so that a committee can obtain the views of representatives of Canadians generally and of the C.B.C. and private broadcasting companies?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I will be very glad to give consideration to my right hon. friend's proposal. After I have been able to give that consideration in consultation with my colleagues I will be in a position to report to the house, at which time perhaps a decision can be made as to what further might be done.

June 16, 1966
Inquiries of the Ministry ST. LAWRENCE SEAWAY



REQUEST FOR REPORT ON NEGOTIATIONS RESPECTING LABOUR DISPUTE

[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, in the absence of the Minister of Labour may I ask the right hon. Prime Minister what progress is being made in resolving the dispute between the seaway authority and the seaway employees. Has the mediator who was appointed been able to bring the parties any closer together, and is there any hope that the strike which is scheduled for tomorrow can be averted?


Lester Bowles Pearson: Mr. Speaker, progress has been made and at the moment the Minister of Labour, the Minister of Transport and the mediator are meeting with the parties to the dispute. That is why these ministers are not in their places. I hope there will be something to report later in the afternoon.


Thomas Clement (Tommy) Douglas: I have a supplementary question, Mr. Speaker. Has the government made it clear to the seaway authority that there can be no possible objection to the workers on the Canadian side of the seaway being paid the same rates as those paid on the United States side?


Mr. Speaker:: Order, please. I do not think that question is in order.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Ron Basford (Vancouver-Burrard):: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. Can he give an answer to the question I directed yesterday to the acting minister regarding the open defiance of the government of British Columbia and its callous disregard for the welfare of our salmon industry by running logs in the Stellako river?


Mr. Speaker:: Order, please. The hon. member knows that questions should not include statements of the nature he is now making. His question certainly cannot be accepted in its present form.


Stanley Ronald Basford: Mr. Speaker, I will, of course, defer to your wishes and apologize. Perhaps I can rephrase my question. Can the minister 
now answer the question I asked yesterday regarding the running of logs over salmon spawning grounds in the Stellako river?


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, according to the regulations under the Fisheries Act the driving of logs on the Stellako river without a permit from the Minister of Fisheries is prohibited by ministerial order issued on February 9, 1966 and published in the Canada Gazette on March 9, 1966. The Fraser Lake Sawmills Company, owners of the logs, have been notified of the order and no permit has been granted to drive the logs.


Mr. Starr:: Mr. Speaker, I rise on a point of order. Are we now considering motions or are we on questions?


Mr. Speaker:: I understand we are on verbal questions.


Hédard-J. Robichaud: Mr. Speaker, my reply is very short, but in order that it may be understood by all hon. members I have to give some detail. The provincial government of British Columbia was notified about ten days ago that no permit had been granted. The intervention of the provincial government of British Columbia by seizing the logs for non-payment of stumpage dues by the company-


Some hon. Members:: Order.


Hédard-J. Robichaud: -and by ordering the release of the logs into the Stellako river has raised serious legal questions. These will have to be clarified before any further action can be proceeded with.


Mr. Speaker:: Order, please. I understand that the answer has now been completed.


Mr. G. W. Baldwin (Peace River):: A supplementary question, Mr. Speaker, which calls for a shorter answer. In view of the action of the government of British Columbia, which follows similar action in connection with the Peace river dam, will the minister give consideration to applying for an injunction against the provincial government, which it is the duty of the federal government to do? Second, if this is not successful will the government give consideration to taking action under section 55 of the Supreme Court Act as to the rights of the respective governments?


Mr. Speaker:: Order, please. The first part of the question is hypothetical. The minister might wish to answer the second part.
June 16. 1966


Hédard-J. Robichaud: Mr. Speaker, the matter is now being studied by the Department of Justice. I have asked the government of
British Columbia to state officially its position. When this is known we will consider making an agreed reference to the Supreme Court of Canada.


Mr. Frank Howard (Skeena):: Mr. Speaker, may I ask a supplementary question of the
Minister of Fisheries. I would ask the minister whether in view of all the difficulties which might be encountered he would consult with his colleague the Minister of Northern Affairs and National Resources to see whether they might exercise the aboriginal rights of the native people over this territory, in order to get the provincial government to cease its invasion.


Hédard-J. Robichaud: Mr. Speaker, before any
further action is taken we have to know officially the position of the government of British Columbia.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question for the Minister of Agriculture. In view of the fact that a number of persons and organizations are apparently attempting to frustrate the minister's policy of an average price of $4 a hundred for manufactured milk-I am sure the minister is aware of this-could the minister tell the house whether attempts are being made to see that this average price will in fact be maintained?


John James Greene: Mr. Speaker, my information is that there are complaints with regard to some processors who have raised the price of transportation with respect to milk. The Ontario milk marketing board has set the price at $3.25, and it is apparently felt that this raising of the transportation cost will ultimately result in the producers receiving less than $4. With respect to the cost of transportation, we of course have no control over this, but I sincerely hope the provincial government will take adequate action to make the $3.25 price effective.
Inquiries of the Ministry


Mr. Eric A. Winkler (Grey-Bruce):: A supplementary question, Mr. Speaker. I should like to ask the minister what action he proposes to ensure that the producers do receive the amount his government promised to them.


John James Greene: My hon. friend knows that the federal government has no authority to set the price paid to producers. Our policy enables the price of $3.25 to be paid plus the 75 cents federal payment. The Ontario government in its wisdom through the Ontario milk marketing board set a price of $3.25, which enabled the price of $4 to be paid. If the processors are taking advantage of this improperly, action can no doubt be taken by the Ontario milk marketing board. It cannot be taken by the federal government, which has no authority over transportation costs.


Wallace Bickford (Wally) Nesbitt: A supplementary question, Mr. Speaker. Would the hon. gentleman, in his capacity as federal Minister of Agriculture, take up this matter with the government of Ontario, and indeed with any other provincial governments concerned, and see whether something cannot be done to maintain the $4 price?


John James Greene: Mr. Speaker, I discussed this matter with the Ontario minister of agriculture this morning.
[Translation1



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. Guy LeBlanc (Rimouski):: Mr. Speaker, I wish to put a question to the hon. Minister of Transport, but due to his absence I shall put it to the Member of the Administration.
In view of the urgency of the problem arising out of the work being done to the landing strip at Wabush and its effects on the Quebecair schedule, can the hon. minister tell us if any progress has been made, within the last few hours, toward solving this ticklish problem?


Hon. John N. Turner (Member of the Administration):: Mr. Speaker, I am pleased to advise the hon. member that a satisfactory agreement has been reached by the contractor and Quebecair in this regard.

June 16, 1966
Inquiries of the Ministry



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. P. B. Rynard (Simcoe East):: I wish to address a question to the Minister of National Health and Welfare or in his absence to his parliamentary secretary, who may wish to take it as notice even though it is a question of extreme urgency affecting the health of all Canadians. Will the minister take immediate action to implement yesterday's recommendation by the Canadian Medical Association that since cigarette smoking constitutes an inherent danger to health, a warning notice should compulsorily be printed on each package of cigarettes?


Mr. Speaker:: Order, please. I do not think this question should be asked at this time since it concerns a matter of general policy. I agree with the hon. member that it is a matter of great urgency, but it is so in a general sense, and I suggest to him it cannot be asked at this time.


Philip Bernard Rynard: As a supplementary comment may I say I certainly bow to your wisdom on this, Mr. Speaker, but the Canadian Medical Association did think it was a matter of great urgency.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: In
the absence of the Solicitor General I wish to address a question to the Minister of Justice following the concern of the house about what is happening in British Columbia. Does the minister agree with the practice of the Royal Canadian Mounted Police in acting as crown prosecutors in the courts of British Columbia?


Mr. Speaker:: Order. This question is not in order.
[Translation1



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I wish to put a question to the hon. Minister of Finance.
Can the hon. minister tell us whether he intends to propose the removal of sales tax on drugs and pharmaceuticals?


Mr. Speaker:: Order. May I point out to the
hon. member that this question concerns general policy and cannot be put at this time?



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: I should like to direct a question to the Minister of Citizenship and Immigration. Can he tell the house how soon he expects to be in a position to announce the government's decision dealing with the many thousands of non-immigrants who have applied for permanent admission to Canada and whose status is and has been in suspense, in some cases for many months?


Mr. Speaker:: Order, please. As the hon. member himself has pointed out, this is a matter of long standing and I suggest to him that it cannot be asked at this time.


Francis Andrew Brewin: I wonder if I might suggest that right now there are a great many people who are worrying about this problem, and I think the minister announced a little while ago that he was going to deal with it.


Mr. Speaker:: Order, please.



LABOUR CONDITIONS

[Stage Direction]
ST. CATHARINES-REPORTED LAY-OFF AT McKinnon industries
On the orders of the day:
Thomas Clement (Tommy) Douglas: wish to ask the Minister of Citizenship and Immigration whether he is prepared to reply to the question I asked him yesterday with reference to the 400 workers in St. Catharines who are employed at the McKinnon Industries Limited and who are likely to be displaced, at least for the summer months, as a result of the Canada-U.S. agreement. The question I asked him yesterday had to do in particular with whether these workers would qualify for TAB, that is transitional assistance benefits.


Hon. Jean Marchand (Minister of Citizenship and Immigration):: That is the only part of the question of the hon. member that I did not answer yesterday. As you know, these workers will have to apply to the adjustment assistance board which has the authority to determine whether they are entitled to TAB. I have not been informed that they have made such an application.
June 16, 1966	COMMONS



CRIMINAL CODE


[Stage Direction]
On the orders of the day:
Gerald William Baldwin: I wish to ask the Minister of Justice when he proposes to introduce into the house amendments to the Criminal Code.


Louis-Joseph-Lucien Cardin: doubt whether it will be possible to introduce any amendments to the Criminal Code before the autumn.


Gerald William Baldwin: I have a supplementary question to put to the minister, and this is one which he might like to take as notice. Has his attention been drawn to the historic decision of the supreme court of the United States dealing with the very important rights of accused persons making voluntary statements; and will he give consideration to that decision before introducing amendments to the Criminal Code?


Mr. Speaker:: Order, please. I assume the minister has taken note of the suggestion made by the hon. member, and I do not think this question can be asked at the present time.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: I have a question for the Minister of Mines and Technical Surveys. Can the minister inform the house whether he will be calling on responsible provincial ministers to discuss and plan a new roads to resources program, or will this be a subject for discussion at the federal-provincial conference?


Hon. Jean-Luc Pepin (Minister of Mines and Technical Surveys):: The position of the government on the roads to resources program is quite clear, and I think it has been expressed many times. We are now analysing the results of the program; the provinces are now spending the rest of the funds allocated to them. In the autumn there will be a conference of the taxation committee to decide on tax sharing between the federal and provincial governments which will affect this program. In due course we will try to find a program that will be acceptable to all or most of the provinces.
DEBATES	6479
Inquiries of the Ministry


Hon. W. G. Dinsdale (Brandon-Souris):: have a supplementary question on the subject of roads to resources. Can the Minister of Mines and Technical Surveys or the Prime Minister reply to a question I asked about a week ago, in which I inquired whether the government is intending to replace the roads to resources program with a national roads policy directed by the federal government, as was indicated in a statement in Winnipeg by the Minister of Northern Affairs and National Resources?


Jean-Luc Pepin: I think my previous answer is quite clear, Mr. Speaker.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
John George Diefenbaker: I wonder whether the
Secretary of State for External Affairs will be more informative today than he was yesterday regarding negotiations being carried on by Mr. Ronning in Hanoi with the administration of that country. There have been newspaper references and observations on this matter, but parliament has not had any information. I ask him to let the country know, and let us know, whether the United States is being kept informed about these negotiations, and whether the visit of Mr. Harriman had any connection with these negotiations.


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, Mr. Harriman's visit had nothing to do with this matter. I feel that, at the present time, there is nothing I can responsibly add to what I have already said.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: have a question for the Minister of Mines and
Technical Surveys which relates to the visit of United States Secretary Udall next week in connection with water pollution matters. Will provincial representatives be requested to be present at the minister's meeting with the secretary?

June 16, 1966
Inquiries of the Ministry Hon. Jean-Luc Pepin (Minister of Mines and Technical Surveys): The question is also in
my mind, Mr. Speaker.


Gordon Harvey Aiken: May I ask whether Secretary
Udall will be accompanied by state representatives?


Jean-Luc Pepin: No, Mr. Speaker, so far as I know he will not.



REQUEST FOR CONSIDERATION OF RULES BY ALL PARTY COMMITTEE

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question
to the Prime Minister. In view of the fact that this house is operating under many rules which are provisional, in the sense that they will expire at the end of this session, is the Prime Minister giving any thought to the appointment of an all party committee to consider this matter so that we might have recommendations to make for next session? I would hope this might be done well before the end of the present session.


Lester Bowles Pearson: Yes, Mr. Speaker, I am giving consideration
to that matter. It seemed to me it would be desirable to have the existing rules given a few months trial before we set up another committee to go into the matter. However, I agree that should be done, and before long.



STUDENT LOANS


[Stage Direction]
On the orders of the day:
Stanley Ronald Basford: should like to direct a question to the Prime Minister in view of the fact that the bill to establish the Company of Young Canadians stands in his name. Will he discuss with his colleague the Minister of Finance the suggestion I made in the house the other day that volunteers for CUSO and the Company of Young Canadians be exempted from the payment of interest and principal on their Canada student loans during the period they serve as volunteers?


Mr. Speaker:: Order. This question might be
considered when that particular piece of legislation is under consideration.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. William Dean Howe (Hamilton South):: Mr. Speaker, in the absence of the Minister of National Health and Welfare I would direct my question to the Prime Minister. In celebration of the second anniversary of the tabling of the Hall commission report, would the government consider giving a grant to the support of mentally retarded and disturbed children, a recommendation which was to be given urgent attention within six months of the tabling of the report?


Mr. Speaker:: Order. This question should be placed on the order paper.



THE SENATE


[Stage Direction]
On the orders of the day:
Mr. J. O. Bower (Shelburne-Yarmouih-Clare):: Mr. Speaker, I have a question for the Prime Minister. Is the Prime Minister still giving predominance to the French Acadian fact in appointing to the other place the missing representative in that chamber from Nova Scotia?


Mr. Speaker:: Order. This question cannot be put at this time.



DOMINION-PROVINCIAL RELATIONS QUEBEC-PETITION RESPECTING CHANGE IN PROVINCIAL CONSTITUTION

[Stage Direction]
On the orders of the day:
Hon. R. A. Bell (Carlelon):: Mr. Speaker, may I ask the Prime Minister a question. Having regard to events which are now taking place in a provincial capital, could the Prime Minister indicate whether any new action has been taken by the government of Canada in respect to the address of the legislative assembly of Quebec, which was passed by this government to Her Majesty the Queen for transmission to the parliament at Westminster, regarding the legislative council of Quebec?


Mr. Speaker:: Order. I gather that this question was asked just a few days ago by one of the members of this house.
June 16, 1966

Bankruptcy Act BANKRUPTCY ACT



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. George Muir (Lisgar):: Mr. Speaker, I have a question for the Minister of Agriculture. Would the minister inform the house whether the government is giving consideration to extending capital assistance to local agricultural fair boards in order that they may build up their fairs?


Mr. Speaker:: Order. I suggest that this question should be placed on the order paper.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Reid Scott (Danforth):: Mr. Speaker, I wonder whether I could direct a question to the Minister of Finance. In view of published reports that the home building industry is grinding to a halt due to the lack of mortgage money, and in view of reports that the banks have money for mortgage purposes if they can charge the N.H.A. rate, would the minister give consideration to permitting banks to enter the mortgage field at the N.H.A. going rate of interest?


Hon. Mitchell Sharp (Minister of Finance):: 


Mr.   Speaker-Mr. Speaker@: Order. I have some doubt whether this question can be asked at this time. It is a question about general policy which I do not think can be asked now.


Reid Scott: On a point of order, Mr. Speaker, you have been good enough to permit dozens of questions on this very point during the present session. I would ask you to give consideration to the urgency of this matter.



SUGGESTED CALLING OF PERPETUAL BONDS

[Stage Direction]
On the orders of the day:
Mr. G. L. Chailerlon (Esquimalt-Saanich):: Mr. Speaker, I would direct my question to the Minister of Finance. Would the government consider calling the perpetual bonds so that the many elderly people who are holding these bonds will not suffer financial loss?


Mr. Speaker:: Order. This question should be placed on the order paper.



AMENDMENTS TO CORRECT ABUSES AND FOR ORDERLY PAYMENT OF DEBTS

[Stage Direction]
The house resumed, from Monday, June 13, consideration in committee of Bill No. S-17, to amend the Bankruptcy Act-Mr. Cardin- Mr. Batten in the chair.
On clause 1-Reviewable transaction.
The Chairman:: Shall clause 1 carry? The hon. member for Yukon.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I want to thank the hon. member for Yukon for giving me the opportunity to speak now; I understand that he had the floor. I also want to apologize to the committee for not being able to be present during the second reading stage of this bill. However, I am happy that we were able to move into the committee stage, where it will be possible to deal generally with the subject of bankruptcy. Like all hon. members I am most anxious for this bill to pass as quickly as possible because, as has been mentioned by hon. members, it is an urgent and most important bill.
The nature and complexity of the problem of bankruptcy make it evident to all hon. members that the amendments to the bill alone will not and cannot solve the problem of what is now termed fraudulent bankruptcies. It is also quite clear that adequate administrative steps are most essential.
Because of the widespread misunderstanding and confusion which exists in the minds of the public with regard to the whole question of bankruptcy, its administration and the law of bankruptcy itself, I believe it is important that a statement be made on all aspects of the subject of bankruptcy at this time. I hope members of the committee will bear with me if I go not only into the reasons behind the principal amendments to the Bankruptcy Act, but also if I describe briefly the steps that have been taken and that must still be taken if in fact we are going to ensure that the administration and control of bankruptcy legislation is adequate to meet the problem that now faces the country in this field. I want to assure the committee that I will be as quick as I can, but I think it is important that a comprehensive statement be made.
In recent months many accusations and allegations have been levelled against the federal government in this field. I believe that all hon. members as well as all Canadians ought to know what actions and

June 16, 1966
Bankruptcy Act
steps have been taken to face up to the problems that have developed in this field over the years, particularly actions that have been taken since the appointment of the new superintendent in April, 1965. I believe this is necessary not only to show that we are aware of the problems and that we have been and still are taking the necessary measures to deal with them, but also to give a good measure of reassurance to the country and especially to those in the business and commercial sections of the community.
There is no doubt in my mind-and I trust that hon. members will share my conviction after they have heard what I have to say- that the changes now contemplated will permit the superintendent to deal much more effectively with the bankruptcy problem and with the flagrant abuse which is made of the present bankruptcy legislation.
In this respect I should like to say a word, first of all, about the important aspect of federal-provincial co-operation in the field of bankruptcy. At the last conference of attorneys general held in Ottawa in early January of this year there was a frank and open discussion of the problems relating to the administration of the bankruptcy legislation. The experience of both the provincial and the federal authorities in this field was discussed, and I am sure no hon. member will be surprised to hear me state that the conference agreed that an adequate and effective system of administration of estates in bankruptcy and the prevention of irregularities depend upon the action of both the federal and provincial governments operating in their respective fields of responsibility, and upon appropriate co-operation between them.
[DOT] (3:10 p.m.)
It would be wrong for anyone to conclude that there was a lack of co-operation in this field between the two levels of government. This is not the case. But this means that the co-operation that has existed in recent years ought to be organized in a more ordinate, articulate and systematic manner. As a consequence the conference set up a small committee comprising the deputy attorneys general of the provinces of Ontario and Quebec and the superintendent to study means of achieving closer co-operation between the federal and provincial authorities.
This committee has met and a procedure has been established whereby both the provincial law enforcement authorities and the superintendent of bankruptcy will be in constant and close liaison. The superintendent of

bankruptcy is presently in communication with the deputy attorneys general of the other provinces, and I do not think there should be any reason why the arrangements regarding the provinces of Ontario and Quebec should not be extended with the other provinces.
I think hon. members will be interested to know, in concrete cases, how the arrangements could work and what kinds of benefits could be derived therefrom. I will mention one example without being specific as to names, places or dates, because this information is taken from an active file.
The trustee of a large estate in bankruptcy came to Ottawa to meet with the superintendent. The trustee explained that he strongly suspected that in the few months preceding his bankruptcy, the bankrupt had fraudulently diverted some funds belonging to the estate to the United States, and that the bankrupt was about to abscond from Canada. The superintendent immediately got in touch with the R.C.M. Police with the request that the trustee be afforded all the necessary assistance in his investigation of the affairs of the bankrupt. This was done. At the same time the superintendent got in touch with the department of the attorney general of the province concerned and arrangements were made to have a crown attorney appointed right at that stage to handle any criminal prosecution that could ensue.
The suspicions of the trustee proved to be well founded. When the bankrupt was about to leave the country for good he was charged, arrested and brought before the court where he is now awaiting trial. This was possible because of the close liaison and co-operation that existed with the trustee as well as between the provincial and federal authorities. There are also good possibilities that as a result of the investigation, the estate will be in a position to recover some of the assets that had been illegally taken out of the country, this to the benefit of the creditors of the estate.
This is but one example pointing up the close liaison that has been established between the provincial and federal authorities, both operating in their own spheres of responsibilities; and I am convinced that hon. members will agree with me that this is a most important achievement.
I must at this point say a word about the spheres of responsibility of the federal and provincial governments in this field. At the
June 16. 1966

conference of the attorneys general the experience of both the federal and provincial authorities, especially in the field of the enforcement of the provisions of the Criminal Code dealing with frauds and other similar offences having some connection with bankruptcies, was reviewed. It was the consensus that the arrangements that resulted from the 1949 act were no longer adequate to deal with the problems that we have to face today.
Of course I do not need to emphasize the point. Bankruptcy and insolvency, under our constitution, is a subject matter of federal legislative jurisdiction, while the administration of justice in the province is a subject matter of provincial legislative jurisdiction. It follows that the investigation and prosecution of fraudulent transactions committed before a bankruptcy are the responsibility of the provincial authorities in the course of the ordinary administration of criminal justice. Even fraud on the part of the trustee falls within the field of provincial responsibility for the administration of criminal justice, although the superintendent is obviously very interested here from the standpoint of disciplinary action and cancellation of the trustee's licence. He may, therefore-and he does in fact-himself investigate, under the provisions of the Bankruptcy Act, charges against a trustee whose administration has been impugned, and in so doing he may often be in a position to give assistance to the provincial law enforcement authorities.
Hon. members are aware that our bankruptcy legislation, like that of other countries, is predicated on the principle of creditor control. Many provisions of the act can be traced to this underlying principle, such as, for example, the provision whereby the trustee should be appointed having regard to the wishes of the creditors, or the provision dealing with the inspectors of the estate who, as representatives of the creditors, assist the trustee in the discharge of his duties.
The important thing, however, for our present purpose is that creditor's control also means that the responsibility for detecting and eradicating irregularities on the part of bankrupts is the prime responsibility of creditors. The trustee has important responsibilities under the act in that respect and he, as well as the creditors, has the necessary powers to enable him to discharge them adequately.
However, in too many cases the trustee is unable to carry out the necessary investigations because of a lack of funds, and too often
Bankruptcy Act
the creditors are not prepared to provide the trustee with their financial assistance because, as they say, they are not interested in throwing good money after bad. It would not be reasonable to blame the creditors for this attitude. They are of course primarily concerned with minimizing their own losses. At the same time, however, it must be appreciated that this attitude does not meet the long term public requirements in detecting and eradicating irregularities.
In these cases the provincial authorities may be asked by the trustee or the creditors to make some investigation into the affairs of the bankrupt. Such requests should be in line with the constitutional position to which I have just referred. However, there is a serious problem area comprising cases where there is some reason to suspect irregularities but where the creditors, on the one hand, are not prepared to undertake the expense of making an investigation and where the provincial crown prosecutor, on the other hand, does not feel that the suspicion of misconduct is strong enough to bring him into the case at that stage.
This is an area where experience indicates
that the principle of creditor control is not working effectively. At the conference the federal government informed the provincial authorities that it was prepared to take the necessary steps, by way of amendment and otherwise, to enable the superintendent tc conduct investigations in this problem area and carry them to the point where suspicion of irregularity is either dispelled or brought to a degree of concreteness where the crown prosecutor or local police may be expected to interest themselves in the case. The provinces have agreed, on their part, to take up the investigation and prosecution in all cases where the evidence, originally or as a result of investigation instigated by the superintendent, will so warrant.
Clause 3 of the bill which will incorporate new section 3A in the Bankruptcy Act gives increased powers to the superintendent to make investigations and inquiries in respect of these cases that fall within the problem area that I have just referred to.
I have just said that the provincial authorities have some responsibilities in the field of pre-bankruptcy fraud, responsibilities that they do not deny; and I do not think it would be out of place to mention here the special interests that the provincial authorities have taken in the discharge of their responsibilities in this field.

June 16, 1966
Bankruptcy Act
The recent steps that we have taken in
co-operation with the provinces to deal with the problem of pre-bankruptcy frauds or planned bankruptcies will do a great deal to improve the situation on that count.
[DOT] (3:20 p.m.)
However, I do not wish anyone to get the impression that the problem of credit frauds or planned bankruptcies is a simple one. It is not, and unfortunately this is so not only in Canada. It is a problem that other countries, especially the United States, have to face as well. I want to stress, however, that we know the problem and that we are taking concrete steps to cope with it and to provide our honest law-abiding citizens with the protection they need in their business dealings.
At the same time everyone must appreciate that this is no reason to be complacent. The best protection that creditors can get is still and will always be sound credit practices. The creditor who sells on credit to anyone whatever the risk, on a dearth of information as to the purchaser's ability to pay the purchase price, simply because he does not want to lose a sale, is bound to get into trouble.
While it is the public authorities' duty to expose offences and irregularities whenever they occur, there is no assurance that the pursuit of these objectives will permit creditors to recoup their losses in all cases. This is far from being certain, and we must not be mistaken as to the actual effect that these arrangements will have in general in individual cases. Creditors will always best serve their interest by alertly controlling their credit.
To deal effectively with this problem, the provincial and federal authorities have joined their efforts and pulled their forces together. This alliance, however, will not be complete unless creditors join in our efforts to stamp out these dishonest practices. They must themselves reassess if necessary their position vis-a-vis this problem and take steps to protect adequately their interest.
This discussion of problems regarding the investigation and prosecution of frauds or other ordinary criminal offences such as perjury brings me to another problem, and that is the enforcement of those provisions of the Bankruptcy Act that create offences directly related to its administration. For example, it is an offence for a bankrupt to fail to disclose his assets to the trustee, or to fail to present himself for examination before the court, or to fail to prepare and submit to the trustee a statement of his affairs.

The act provides that when the bankruptcy court is satisfied, upon the representations of the superintendent, official receiver or trustee, or any creditor or inspector, that there is ground to believe that an offence has been committed under the Bankruptcy Act or the Criminal Code in connection with a bankruptcy, the court may authorize the trustee to initiate a prosecution. Where a trustee is so authorized either by the creditors, the inspectors or the court, he is required to institute the proceedings and to refer the matter to the local provincial crown attorney.
This is another area where experience has shown that the machinery provided by the 1949 act to deal with offences of an administrative character is not adequate. Experience has shown that in too many cases bankrupts would disregard the requirements of the act and, although the trustee may have reported the offence to the court, nothing would be done with a view to pursuing the matter. This, you will agree, is most unfortunate, but on the other hand should not be too surprising if one considers that the courts do not have the administrative machinery to deal with this type of problem.
Although there are not statistics as to the number of such offences, there are indications that they are far too many and that the lack of prosecutions in these cases has to some extent contributed to an unfortunate laisser-aller attitude in this area and facilitated the operations of those individuals who want to use bankruptcy legislation for purposes other than those that have been ascribed to it by parliament.
There is another area where the federal government has decided to step in. While these offences may still be pursued by the trustee at the instance of the creditors, in the future the superintendent in proper cases, if the matter is not pursued by the trustee, will take the initiative. The prosecutions when initiated by the superintendent will be conducted by counsel in the Department of Justice. In this way we hope to tighten up the administration of the act and make sure that debtors who seek the benefits that flow from bankruptcy will submit themselves to the various requirements of the act.
One of the cornerstones of our bankruptcy legislation, as hon. members know, is the trustee. Only persons who have been licensed by the superintendent under the authority of the Minister of Justice may, as a rule, be appointed to administer estates under the
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Bankruptcy Act. Trustees are the cornerstone of our bankruptcy system, but from time to time some have been a cause of considerable concern. This, it must be appreciated, is not by any means a new problem.
Back in 1932 parliament introduced the licensing of trustees system because of the abuses that had been uncovered in the administration of estates in bankruptcy. In the same year parliament for the same reason created the office of the Superintendent of Bankruptcy to supervise the trustees administration. I would assume that this legislation resulted in some improvements, but in the late fifties other abuses were reported which resulted in a large number of investigations and prosecutions as well as the suspension and cancellation of a number of trustees' licences.
It was felt necessary at that time to arrange for an auditing of all the trustees in bankruptcy. However, it was only in April of 1964 that the first systematic and periodic audit of trustees was put into effect as the result of an arrangement between the superintendent and the audit services of the comptroller of the treasury of the Department of Finance.


Mr. Nielsen:: May I ask the minister a question at this point? I do not want to prejudice any current files by asking it, but can he answer whether any licences of trustees have been revoked or cancelled since the publication of the Mercier report? Once again I assure him that if he cannot answer without prejudicing current investigations then I do not require an answer.


Louis-Joseph-Lucien Cardin: I can tell the hon. member that
licences have been revoked. I cannot say they have been revoked because of considerations or evidence contained in the Mercier report but some trustees' licences have been revoked.
Arrangements were also made to have the R.C.M. Police carry out a field investigation of all applicants for a licence. At the same time the R.C.M. Police continued to be extensively used in investigations of and spot checks on the trustees' administration. The results of these arrangements, although assuredly they brought about some improvement, were not as satisfactory as had been expected. To continue our policy of improvement we had to look for other solutions and approaches to the problem.
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I sincerely believe that we will not be in a
position to improve on the situation by anything falling short of requiring applicants to submit to a formal examination before a board. However, the policy regarding the licensing of trustees is obviously one of the questions that the revision committee, which has recently been set up to assist with the revision of the Bankruptcy Act, will carefully consider. I am sure that not only will the policy regarding the licensing of trustees be carefully considered but that the advisability of establishing a system of some sort of public trustees, as exists in England and Australia, will be one of the questions that the committee will look into.
In the meantime I do not intend to authorize the appointment of new trustees save possibly in very exceptional cases where the public interest might be involved. So far I have received no indication that the fact that no new trustees have been appointed in the last 14 months has caused any prejudice to the public.
In so far as present licensees are concerned, we have continued to exercise close surveillance on their administration. Since the month of April 1965-and perhaps this will answer the question posed by the hon. member for Yukon-five licences were either cancelled or not renewed for cause.


Erik Nielsen: Would it be not in the public interest to disclose the names of the trustees who lost their licences? If that is so, then I do not insist on an answer.


Louis-Joseph-Lucien Cardin: I could indicate what trustees have lost their licences but I am not sure that this would do anyone any good because they no longer practice in that particular profession and some of them are before the courts. Furthermore, a large number of licences were also renewed at the end of 1965 for the sole purpose of permitting the trustees concerned to dispose of the estates in their hands. The positions of some of these trustees have since been reviewed and a number of restrictions have been lifted. Two former trustees have recently been brought before the courts on charges of misappropriation of funds. One has pleaded guilty and was sentenced last Friday to two years imprisonment; the other is awaiting his trial.
[DOT] (3:30 p.m.)
If we have taken strong action to eliminate the undesirable individuals from the ranks of the trustees we also at the same time have

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recently implemented a number of measures to assist them in providing a still better service to the community. I shall elaborate on that in a moment. I have said that trustees are the cornerstone of our bankruptcy administration system. The superintendent, on the other hand, is now the keystone of the entire system. This is so, of course, because of the key role he plays in the surveillance of the administration of all estates in bankruptcy and also because of his increased responsibilities regarding the pre-bankruptcy problem area to which I referred a moment ago.
Furthermore, I believe that the Superintendent of Bankruptcy is in a position to show the way to the other officials concerned with bankruptcy administration. Of course, in order to assume this leadership the superintendent needs a sufficient supporting staff. Hon. members might be interested to know in that respect that from 1958 to 1962 the establishment of the office of the Superintendent of Bankruptcy provided for 11 positions, including two positions of auditors. In 1962 two more positions of auditors were created. In 1964 the positions of assistant superintendent and office manager were created. In September of 1965 the number of auditor positions was doubled and brought to eight. In November of the same year two new positions providing for a bankruptcy officer having residence in each of the cities of Montreal and Toronto were created. This was the first time that the office of the Superintendent of Bankruptcy had on its permanent staff officials operating outside Ottawa.
Therefore, while in 1961 there were 11 positions in the office of the superintendent, this has now been increased to 31. This in my view is an achievement that deserves mention, but hon. members must know that we do not consider the superintendent's office will be able to assume the task that is expected of it without further changes in its establishment.
Just yesterday approval was given for a major reorganization of the office of the superintendent by providing for a considerable enlargement of the skeleton offices already operating in Montreal and Toronto and by opening up an office in Vancouver. The Vancouver office would look after the province of British Columbia as well as the other three western provinces. The Montreal office would take care of the province of Quebec and the Maritime provinces as well. It is intended that each of these offices will comprise auditors and investigators. We are also

contemplating the creation of two positions of deputy superintendent to assist the superintendent.
The proposed arrangements will permit a still closer surveillance of the trustees' administration through auditors and investigators especially trained by and under the direct control of the superintendent's office. They will also permit an effective enforcement of the provisions of the act creating offences of an administrative character. It is intended, furthermore, that the auditors on the staff of the superintendent will be available to assist the R.C.M. Police in their investigations regarding pre-bankruptcy frauds.
Other measures which also have been taken or are contemplated by the department are:
First, the appointment of a judge of the superior court for the Montreal district to sit full time on bankruptcy matters.
Second, the preparation and circulation of bulletins to the trustees to assist them in providing a better performance in uniformiz-ing procedure, in better understanding the various requirements of the act and so on. Two of these bulletins have already been circulated and others are in the course of preparation.
Third, we propose to organize seminars for registrars and official receivers with a view to permitting exchanges of experience, discussion of problems of mutual concern, standardization of procedures and so on. The superintendent is already in contact with the provincial authorities with a view to exploring this project further.
Fourth, we are also exploring the possibility of preparing a kind of code of procedure for official receivers and registrars.
Fifth, we propose to review our statistics program. It is obvious that we will have to put into effect a revised program that will permit the collection of all of the statistics that the competent authorities need to assess the problem areas in the field of bankruptcy. Our statistics program, as it stands now, contributes very little in that respect.
To sum up, the department, as I have said in my opening remarks, has taken, I think, practical and effective steps to cope with the developments that have been taking place in the field. I should like, however, at this point to emphasize that specific cases of irregularities are dealt with immediately they are detected and in that respect we have, as I have just said, improved and are still improving our means of detection. What we are in
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need of at this point is the co-operation of all civic-minded citizens. We need to be provided with any available information pointing to irregularities or offences so that they may be dealt with within the framework that I have described a moment ago. The task of the department working alone is not easy. Against the unholy alliance of the dishonest debtors, unscrupulous businessmen and unethical lawyers and accountants, we must present the alignment of all of the forces, the civic-minded citizens, the bankruptcy courts and the Department of Justice, all working together in a spirit of co-operation and collaboration for greater integrity of the bankruptcy proceedings. It is in that spirit that I urge anyone who has information pointing to irregularities on the part of trustees or others to come forward and lay this information before us so that we can immediately look into it and, if necessary, launch the appropriate investigations.
I have dealt up until this point with the different steps that we have taken to [DOT]continue our policy of improvements in the administration of the present Bankruptcy Act. We have looked carefully at the legislation itself and it is obvious that it can and should be improved to meet the problems that changes in our society have brought in recent years. Bill S-17 which we are now considering is not a revision of the Bankruptcy Act. As hon. members know, a committee of three members has recently been appointed to assist with a thorough revision of bankruptcy legislation. Since the last revision of the act in 1949 a very large number of representations for amendment to the act have been received from various individuals and organizations, including leading commercial, business and professional associations. A great amount of work had already been done in the Department of Justice toward a complete revision of the act and the assistance provided by the committee on the revision should accelerate the completion of this important and difficult task.
Bill S-17 is an interim measure designed to provide an immediate remedy to some of the most urgent areas of complaint. A number of high priority amendments have therefore been incorporated into this bill and, should they be adopted, I believe they will do a great deal to correct some of the most flagrant abuses of the bankruptcy process. The bill had been very carefully considered by the standing committee on banking and commerce of the other place. As a result a number of changes
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were made to the bill and these changes, with one exception with which I shall deal in a moment, are acceptable to the government. I will have myself three possible changes to bring to the attention of the committee.
I should like to deal briefly with the high priority amendments to which I have just referred because I feel they are most important. One of the most important clauses of this bill is clause 3, to which I have already alluded. It will give increased powers to the superintendent to make investigations and inquiries in respect of those cases that fall within the problem area to which I have just referred. The amendment especially enables the superintendent, with the approval of the court, to search premises for documents that may afford evidence as to an offence in connection with a bankruptcy, to examine such documents and to make copies. Whenever the superintendent obtains evidence of an offence of a criminal nature he will report the matter to the provincial authorities.
[DOT] (3:40 p.m.)
In the other place-and this I should like hon. members to note-a new subsection was added to section 3A incorporating by reference section 126A of the Income Tax Act dealing with the solicitor-client privilege. Under section 126A of the Income Tax Act the document in respect of which the privilege is clamied must be put in a sealed envelope without examination and without making copies. An application must then be made to a judge to determine whether the privilege exists. This procedure applied to the investigation of bankruptcy irregularities would, it is believed, frustrate the investigation. The purpose of examining documents would in many cases be to ascertain who are involved in a suspected fraud connected with a bankruptcy and what the relationship between them may be. This would not be possible if the documents must be sealed up and cannot even be examined. By the time they can be examined it may be that documents in the possession of the persons involved would be gone. If they can be examined immediately then it might well be possible to make a search in other places before there has been an opportunity of destroying or concealing records. Assessment for income tax is a more leisurely process and it must also be borne in mind that we are dealing here with offences and not assessments for income tax.
In the investigation of offences time is of the essence and it may very well be that an

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investigation can be completely frustrated if a solicitor-client privilege is asserted and the procedure outlined in the Income Tax Act has to be followed. Moreover, it may well operate as a protection to wrongdoers. Companies carrying on an unlawful enterprise could leave their damaging documents with their solicitor and in that way secure some protection against investigation of their activities.
I am sure that hon. members will give particular attention to this change and consider whether this protection is necessary and warranted, bearing in mind that it is necessary and essential that the superintendent's powers of investigation and examination be resorted to without undue interference. When we come to the appropriate time I propose to introduce an amendment which would in effect drop the change that was brought in by the other place.
Another important amendment has to do with reviewable transactions. We have received numerous representations in recent years regarding certain transactions involving related persons or a closely held corporation and its directors or shareholders in contemplation of bankruptcy. For example, in contemplation of bankruptcy the corporation would pay exorbitant salaries or expense allowances to officers of the company, or the debtor would sell at an unreasonably low price some of his assets to persons or corporations who in some way control the debtor. While transactions of this kind may, under the present state of the law, be legal they do not on many occasions come within what may be called moral business practice.
The amendments-clauses 1 and 12 of the bill-incorporate in the Bankruptcy Act the concept of "at arm's length" which is used in income tax matters. The court will have the power, on the application of the trustee, to review transactions between the debtor and related persons that have taken place within the 12 months preceding the bankruptcy. If the court finds, after having inquired into the matter, that the consideration for the transaction was conspicuously excessive or inadequate, it will give judgment to the trustee for the difference between such consideration and the fair market value of the property or services.
The bill also provides that where a corporation within 12 months preceding its bankruptcy has redeemed shares or granted a dividend when the corporation was insolvent or that it rendered the corporation insolvent,

recovery may be made against the directors or against certain of the shareholders of the bankrupt corporation. Other provisions of the act are amended to restrict the rights of creditors that are related to the bankrupt.
One of the substantial changes that was made to the Bankruptcy Act in 1949 dealt with proposals made by insolvent persons. While it appears that these provisions have been of considerable benefit to debtors and creditors alike, these amendments will eliminate the possibility of abuses by giving the creditors, under the direction of the court, more control over the assets of the debtor. They will also provide that if the proposal is not accepted by the creditors or by the court, the debtor will be deemed to have made an assignment on the date the proposal was originally filed with the official receiver. Likewise, if a proposal is not followed through by the debtor he will be deemed to have made an assignment in bankruptcy.
Other amendments clearly set out a procedure whereby bankrupts may be required to contribute some part of their post-bankruptcy income to the trustee for the benefit of the creditors. The present act would seem to indicate that a contribution may be required but this has been left to the discretion of trustees and the courts with the result that debtors are treated in a most inconsistent manner across the country.
It is often alleged that certain trustees would inform the debtors that they must pay a certain sum to cover the trustee's disbursements and fees, whereupon they would presumably get their discharge. It is also alleged that there are in numerous cases no attempts on the part of the trustee to collect a portion of the debtor's remuneration.
With this amendment the trustee will have the obligation, when directed by the inspectors or the creditors, to see that the debtor deposits for the benefit of his creditors a certain portion of his salary, wages or other remuneration. It is thought that these provisions will prevent the obtaining of a too easy discharge from personal debts through bankruptcy proceedings. As hon. members know, there are a considerable number of other amendments which were referred to very ably by the Solicitor General the other day and I do not propose to repeat what he said.
However, I should like to remind hon. members that this bill does not purport to provide an answer to all of the problems that the representations that were received have raised. Hon. members will appreciate, I am
June 16, 1966

sure, that the numerous representations that were received touch upon almost all the sections of the Bankruptcy Act, which of course are now being reviewed by the revision committee. I need not at this time review these representations but hon. members might be interested to hear about some of the problems that were raised and which are being considered by the committee.
One of the problems, of course, has to do with the easiness with which debtors in certain cases can obtain a discharge from their liabilities. The manner in which bankrupts are being dealt with by the courts no doubt needs to be completely reappraised and the provisions of the present act carefully looked into. This is a problem that has been a cause of some concern, I am informed, in England and Australia and the committees that have been charged by the governments of these countries to recommend amendments to the bankruptcy legislation have made recommendations for substantial changes in that area. This is a problem on which recommendations from our committee to assist in the revision of the Bankruptcy Act will be most helpful.
Another area which will have to be most carefully looked into has to do with the structure of the bankruptcy court itself. Under the present legislative and administrative arrangements the official receivers, although appointed by the governor in council, are in practice employees of the provincial authorities. These authorities will look after the official receivers' remuneration and provide them with the required facilities. The registrars of the courts on the other hand are appointed by the chief justice of the court having superior jurisdiction in the province. In practice, again the registrars are employees of the provincial authorities from whom they receive their remuneration and are provided with the required facilities. These arrangements leave much to be desired and we will be most interested to know what the committee has to say in that respect.
I am inclined myself to feel that the most serious consideration should be given to the advisability of giving exclusive bankruptcy jurisdiction to the Exchequer Court of Canada. I do not intend here to show what benefits would be derived from the giving of exclusive bankruptcy jurisdiction to a court such as the Exchequer Court, and I have no doubt that substantial changes would have to be made in the organization of that court to enable it effectively to assume that jurisdiction. The committee will undoubtedly look into this possibility.
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[DOT] (3:50 p.m.)
The task of the committee is most important and we trust that the study the committee is now carrying on, as well as its recommendations, will assist us to decide on a new, completely modern Bankruptcy Act adapted to present-day commercial, business and social trends. In the meantime I believe that the passing of this bill, although it may not solve all the problems, will make a significant contribution to the proper functioning of our present bankruptcy legislation, which is of concern to all of us.


Erik Nielsen: Mr. Chairman, before the minister concludes his remarks there is one question I should like to ask him before embarking upon my own remarks. It concerns a very important aspect of the changes which have come about, namely, the appointment of two officials for the purpose of conducting investigations under the act. I wonder whether the minister would deal with the present status of that body, when he expects it to move into action and what its function will be.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I presume that
the hon. member is referring to the superintendent's representatives in the cities of Montreal and Toronto. Actually there is one man in Montreal, Mr. Chicoine, and there is another in Toronto whose name slips my mind. But we have, as I stated a moment ago, recently been authorized to increase the staff both in Montreal and Toronto in order to have investigators and accountants in both these cities. Further, we intend to open an office in Vancouver and have approximately the same type of arrangements so that these investigators will be on the spot and ready to move in whenever it is required of them to do so.


Erik Nielsen: Mr. Chairman, I thank the
minister for that explanation. We are not going to impede at all the passage of this legislation which we consider to be emergency legislation to meet an emergency situation. The extensive description that has been given by the minister to the committee is justification for the alarm and the ofttimes sharp criticism that he and the government have been receiving not only from this side of the house but also from organizations throughout the business world.
The specific amendments that are set forth
in the bill, some of which impart rather sweeping powers, we hope will not in all cases become permanent because in the other

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place the criticism was levelled, a criticism
with which I must agree, that we do not want to panic ourselves into passing laws which are the equivalent of placing public officials in possession of police state powers. The committee that is considering the final revisions to the Bankruptcy Act, which I presume will be coming before the house in several months time, must have at the forefront of its considerations, assuming that the final amendments will not reach this house for a year or a year and a half as I anticipate may be the case, these wide and sweeping, almost police state, powers that are now being given to the superintendent. We agree with them now because we feel they are very necessary to clean up a situation that has got out of hand.
The minister has been speaking of co-operation. I have noted the various changes that have been brought about within the office of the superintendent and the various policies which have been adopted in order to meet situations as they have arisen. One criticism that I have to advance of the conduct of the minister, his predecessor and the government is that they have not been reacting sufficiently to the demands by public-spirited organizations and by the opposition for a cleaning up of the situation. In December of 1965 the minister mentioned that these officials were being appointed in Montreal and Toronto and in September of 1965 a change was made which was described by the minister and which I will not go into in detail.
I am sure the minister does not forget that in September of 1965 it was Mr. Kierans of the province of Quebec who launched one of the most violent attacks on the office of the justice minister in the federal government for negligence and failure to act in this field. That, coupled with the voices raised on this side of the house has, I believe, finally brought about some kind of positive action on the part of the government. But this is still not enough. These reputable organizations are still making the request to the minister that the government set up a royal commission to investigate fraudulent bankruptcies and the extent to which racketeers and organized crime are using the bankruptcy legislation in the more densely populated areas of our country.
I have been saying this, as have others on this side, and we have been singled out as some kind of radical element that is demanding something which is not necessary. But let me now place on the record some of the

names of the organizations which have been making this type of request of the minister and the government for several months, indeed years. As recently as March of this year a group of these organizations got together in Montreal. Represented at the meeting were the Montreal Home Builders Association, the Quebec Province Association of Certified General Accountants, the Quebec Lumber Retailers Association, the Quebec Lumber Wholesalers Association, the Montreal East End Businessmen's Association, the Association of Canadien Italian Businessmen and Professionals of the Province of Quebec, the Association of Architects of the Province of Quebec, the Montreal North End Businessmen's Association, the Montreal Junior Chamber of Commerce, the Confederation of National Syndicates, with a membership of 175,000, the Quebec Federation of Labour, with 200,000 members, the Council of Businessmen's Associations, the Federation of Businessmen's Associations of the Province of Quebec, the Montreal Commercial Center and the Canadian Lumbermen's Association.
These associations are the only ones I shall mention at this time although there are others which endorse the request to the government for a royal commission to be appointed to investigate fraudulent bankruptcies. So we are not alone on this side of the house, nor am I when I have repeatedly made this demand of the government. We are in extremely good and reputable company. I am sure the minister is aware of the associations whose names I have read to him because he has been on the receiving end of a good many representations and complaints not only from these associations but from individuals connected with them. He did not cover in his remarks what reply he intends to make to the kind of representations he has been receiving.
I feel that a very useful, indeed, essential purpose can be served and must be served by the creation of a royal commission to investigate fraudulent bankruptcies, and I will tell the minister why. He can appeal and appeal until he is blue in the face and he will not encourage informants to come forward who fear reprisals of one kind or another, whether they be physical or business. These people will-
[DOT] (4:00 p.m.)


Louis-Joseph-Lucien Cardin: I wonder whether the hon. member would be able to tell us what protection a royal commission could give that could not be given by the government?
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Erik Nielsen: It is a psychological thing, Mr. Chairman, and I am surprised that the minister does not appreciate it. Maybe he does and he is attempting to toy with me.


Louis-Joseph-Lucien Cardin: No, no.


Erik Nielsen: Here is the way in which the informer looks at it when he brings his package of information to the investigating authorities. Sooner or later the officers investigating the information will question someone who has it in for the person who discloses that information. All this takes place under cover, as it should. Investigations would be useless unless they were conducted in that fashion because investigating officials do not usually wish to give warning and allow the bird to fly. A similar argument can be used with respect to taking documents into custody because very often documents are burned at the first hint of an investigation, so naturally the conduct and progress of an investigation are kept most confidential. As soon as word reaches the suspected offenders involved that an investigation is impending, the danger of reprisal becomes very real.
If the minister doubts this then I suggest that he should examine, as I suggested in the house the other day, the analogy of the Norris Commission. Before that commission was set up not one single person complained of beatings and other offences under the provisions of the Criminal Code, but once the ice was broken a deluge of seamen and other witnesses appeared before the commission, spilled their hearts out in a number of complaints against the S.I.U. and pointed their fingers to the misdeeds of people such as Banks and others. The complainants are protected through the focusing of public attention not only on the general situation but also on their own personal situations, and woe betide anyone who makes any effort to coerce an individual appearing before such a commission. Quite the converse takes place in an investigation carried out under cover.
This is one good purpose that would be served. These people would come forward much more willingly and eagerly than they are doing now if they could rely on the protection that would be afforded by the public attention given to a royal commission investigating the whole spectrum of fraudulent bankruptcies.
I am sure the minister is aware of this because both he and his superintendent have certainly received far more complaints than I have and I dare say he has received them
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anonymously. The reason he gets these anonymous complaints is the very fear that exists. As I said, I am not alone in making this suggestion. If I were, perhaps I could be described as a radical and shot down for even deigning to mention the possibility that a royal commission could do some good. But here are some 15 reputable associations from the minister's own province which are asking for such an enquiry and other associations can be added to that list.
When Mr. Wagner was still minister of justice in the province of Quebec he repeatedly called for the establishment of a royal commission on organized crime and I am very certain he thought that a good deal of the commissions's attention would be devoted to fraudulent bankruptcies. However, if the government is not in favour of the establishment of a royal commission on organized crime-and I believe that the situation existing in Canada today urgently calls for its establishment-then at least let the minister reconsider the submissions that have been made to him both in and outside this house regarding the good that would come from the creation of such a commission.
The minister has cited a case to try to justify the lack of attention that complaints about fraudulent bankruptcies have been receiving and has attempted to divert attention to overlapping jurisdiction between the provincial and federal authorities. He went on to say that in the long run it is the creditors who are primarily responsible for bringing irregularities and wrongdoing to the attention of the officials. He knows as well as I do how frustrated these creditors become when they go to the provincial authorities and ask for action. The provincial authorities tell them that this is not within their jurisdiction, that this is the responsibility of the federal government. So the complainants come to the federal government with hat in hand and ask the Superintendent of Bankruptcy or the minister and his officials for some kind of remedy, but they get the same answer: This is not our responsibility; it is the responsibility of the provincial jurisdiction.


Louis-Joseph-Lucien Cardin: Will the hon. member not agree that the amendments which have now been introduced deal with that aspect of the matter in particular? The complaints which the hon. member mentioned did exist previously but the superintendent has been given new powers precisely for the purpose of permitting him to investigate areas where either the provincial government or the
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creditors did not feel they had enough money to carry out these investigations, and did not do so. It seems to me that these amendments answer the hon. member's complaints.


Erik Nielsen: I do not think they do. While 3A gives very wide, sweeping and necessary powers, it does not cover certain situations about which I will comment in a minute. The minister. said, "if the creditors do not have enough money". I do not agree with the principle that it is the creditors' responsibility to bring the wrongdoer and offender to account. I believe that responsibility lies with the law enforcement officials, and if it is a proper responsibility of the provincial officials let them conduct the investigation which will result in bringing the wrongdoer to account. However, when the responsibility lies with the federal jurisdiction, as it does in so many cases, then it becomes their direct duty. This is where the amendments do not cover the situation.
The move to set up an assistant superintendent of bankruptcy, if we can call him that, in Toronto, Montreal and Vancouver is an excellent and long overdue action. He will be able to co-operate closely with the provincial authorities but, even more important, because of the national scope of this racket he will be able to co-operate with specialized squads of R.C.M.P. officers, the national police force, in order to trace the thread of any organization which may exist in fraudulent bankruptcies. This is good. But let us suppose a creditor comes to a trustee and complains of an offence. My head is crowded with examples which I hesitate to discuss for reasons of which the minister is well aware. Let us suppose a creditor says to a trustee, this is what the inspector told me and this is what he did, and suppose the trustee decides to do nothing, which is often the case. I am not speaking of the present superintendent but there were many files in the office of the previous superintendents of bankruptcy which remained dormant.
[DOT] (4:10 p.m.)
Suppose the trustee exercises his discretion and decides there is nothing to investigate? Suppose the trustee says, this is not a proper area for investigation by the provincial authorities because it is a matter the federal authorities should look after? The creditor is then required to go to the officials in Ottawa or, now that it is more convenient, to the officials in Montreal or Toronto. Suppose he is given the same runaround there?


John Napier Turner: May I ask the hon. member a question? Under the Bankruptcy Act as it has existed, if the trustee refused to act the creditors always had the -opportunity of prosecuting in their own names. They could go to the provincial Attorney General who, after all, has responsibility for criminal enforcement under the constitution. Has not the problem been that the provincial Attorneys General have not responded to the petitions of the creditors?


Erik Nielsen: I am afraid that may be correct in certain instances. However, the minister knows as well as I do that in the current cases, about which he is informed as well as I, circumstances have been placed before provincial authorities and not acted upon for two or three years. Likewise, the same circumstances have been put before the federal authorities and not acted upon for the same length of time. Just because it is claimed that there is overlapping jurisdiction-


John Napier Turner: If I may ask the hon. member another question, surely the responsibility in the federal jurisdiction has been supervisory but the enforcement responsibility has been provincial. It was my experience, when I was in private practice in Montreal and to a certain extent in Toronto, that the problem was that the provincial Attorneys General were not responding to the creditors.


Mr.   Nielson@: Again I will admit to this situation existing in connection with certain cases. However, I am speaking about dozens and dozens of other cases where that is not so. There is something else with which I want to deal, now that the Minister without Portfolio has brought it to my attention. I should like to refer to the fallacy that the federal government has jurisdiction only in the supervision of trustees with regard to bankruptcy matters. This is not correct. The federal government has lost millions upon millions of dollars in revenue each year because of these fraudulent bankruptcies. The minister will not gainsay this at all.


Louis-Joseph-Lucien Cardin: I think we should be clear on this. We have an interest in lost revenues. That is correct. However, constitutionally I do not believe even the hon. member for Yukon will deny that the actual administration of justice in the field of criminal law is a provincial matter. We are dealing with frauds. The federal governments responsibility is for the administration of the Bankruptcy
June 16, 1366

Act. We are responsible for the administration of the trustees. We also look after the work done by the registrars. I think it should be clearly borne in mind that from a constitutional point of view the federal government must look after the administration of the Bankruptcy Act but the actual administration of justice is a provincial matter.
This does not mean we are not interested. As a matter of fact, what we have been doing recently has been to co-ordinate with the provinces in order that the responsibilities of both the provincial and federal governments be served.


Erik Nielsen: At long last. That is excellent. It is, however, far short of what is required. I am one who is going to support the minister in his idea that bankruptcy jurisdiction should be centralized in one national court, the Exchequer Court. I am going to suggest to him also that we should treat fraudulent bankruptcies, because of the sophisticated nature of the criminal element which is using them as a lucrative field for illicit gain, in the same way as narcotics are treated in this country. I believe special squads should be set up for the purpose of investigating fraudulent bankruptcies on a national scale. There is no reason for continuing to support separate jurisdiction in the administration of bankruptcies between the provincial and federal governments. We centralize the jurisdiction over narcotics and in the field of combines investigation. Why should we not advance to the point of adopting a policy of centralizing jurisdiction over this kind of fraud in the light of modern-day, sophisticated, criminal techniques?
This course should be followed for the same reasons that we have centralized jurisdiction over narcotics and combines. The hon. member for Peace River has made a very valid point. In the case of narcotics and combines investigation, the federal government controls the prosecutions by appointing special prosecutors in order to bring wrongdoers to account. Why should we not look ahead and do the same thing in the bankruptcy field?


Louis-Joseph-Lucien Cardin: This is exactly what we are doing.


Erik Nielsen: I am afraid that was not my understanding of the minister's remarks. I thought he was expressing the opinion that we should have this national service in the Exchequer Court. However, I thought both he 23033-411a
Bankruptcy Act
and the Minister without Portfolio were saying there was still a separation of jurisdiction with provincial responsibility to prosecute offenders for offences committed under the Criminal Code in connection with fraudulent bankruptcies.


Louis-Joseph-Lucien Cardin: If I may clarify that, it is true that the establishment of a national court or the possibility of one being set up is being studied. There is still, however, a constitutional division of jurisdiction in the bankruptcy field but we have, by this arrangement between the superintendent and the deputy attorneys general of the provinces, arrived at a point where we can treat these fraudulent bankruptcies much the same as we treat narcotics.


Erik Nielsen: The atmosphere of co-operation that exists as described by the minister now-I will not refer further to past statements made by officials of the province of Quebec-is laudable but at best is a tenuous thing. If there were centralization on a permanent basis as in the case of narcotics or combines, then you might have something more permanent with which to work.
If I may return to what I was saying, and I am not going to be sidetracked, there is federal jurisdiction with regard to the functions of trustees. There is responsibility also on the part of the federal government to see that the government is not being bilked of revenues that would otherwise accrue to the national treasury. This is one very positive area of responsibility. There will, I hope, exist that kind of close, intimate co-operation that has not hitherto existed between the superintendent's office and the Department of National Revenue. I am sure that over the years hundreds of millions of dollars have been lost to the federal treasury. In his report Mr. Mercier placed the direct loss to the provincial treasury between 1960 and 1964 at $52 million. When I listen to debates in this house concerning the need for funds for the promotion of education, for health purposes, building new hospitals, for this social welfare program and that, for increasing old age pensions, I realize that the loss to the federal treasury from fraudulent bankruptcies last year alone would pay $25 per month to every old age pensioner in this country. This is how serious the loss is. There is a very direct and urgent responsibility that lies on the shoulders of the federal government in that specific area.

June 16. 1966
Bankruptcy Act
[DOT] (4:20 p.m.)
The minister has divided offences into prebankruptcy frauds and offences with respect to fraudulent bankruptcies. This is a very legitimate distinction which he makes. Indeed, in addition to the case he cites one of the more common situations which one meets in these fraudulent bankruptcies is where a fraudulent operator simply appropriates a name closely resembling the name of an existing legitimate company, operates under that name or a series of such names, and then within 60 to 90 days simply packs his bags and disappears. The minister speaks of seizing books of account and documents. As soon as the inspectors or investigators arrive on the scene they find that the address at which this sort of operation is carried on is some small shack 20 by 20 with nothing in it at all. This is not an unusual situation. This is a pre-bankruptcy fraud and distinct from the Iminister's responsibility under the Bankruptcy Act.
Now, Mr. Chairman, how about those individuals whom Mr. Mercier dealt with in his report under the section on trustees? I am surprised, quite frankly, that there are only five trustees-I will not insist upon the minister naming them-who have had their licences withdrawn since the issuance of the Mercier report.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I am sure the
hon. member is also interested in this fact. Once the Mercier report was completed we corresponded with the provincial officials in order to get whatever information they had about irregularities which might have been committed by trustees. However, we did not receive any information in this regard. Subsequently, in the absence of evidence or statements regarding irregularities, I wrote the then premier of Quebec and asked him whether he would permit one of the officials of the federal government to go to Mr. Mercier's office to see for himself whether or not there would be evidence which we could use against trustees so that we could take the proper action. The officer has been there for some time but there has not yet been any evidence produced to substantiate a prosecution in this field.
The five trustees who in fact lost their licences lost them not as a result of the Mercier report. To my knowledge no prosecution has been undertaken by the provincial

government as a result of the Mercier report. That is absolute fact.


Erik Nielsen: That is an absolutely astonishing comment on the Mercier report because no one could have been more positive than Mr. Mercier in his report about evidence existing which involves trustees. He makes that flat statement in his report. He even goes so far as to say that it was shown that in practice certain trustees are the potentates of the quasi-totality of the bankruptcies which they administer. He says that because of their extensive knowledge in bankruptcy matters they usually manoeuvre the unsuspecting inspectors as if they were puppets. In many instances it was established that certain trustees had cleverly arranged the appointment of one or more of the inspectors. He said it is all so easy that the creditors and inspectors in good faith showed a disinterest, and the commission has already brought this to light.
Mr. Mercier also said at page 8 of his report that the inquiry further established that the specialists of one of these rings operated with the knowledge of the trustee who hired one of them regularly at the taking of the inventory. These are two brief examples of what Mr. Mercier said was established by the inquiry. Consequently I am shocked to hear the minister say that after examining the wealth of material which Mr. Mercier's commission obviously had in its possession there exists no evidence of the nature he described.


Louis-Joseph-Lucien Cardin: It was just because of the nature of the statements which were made that we were so anxious to get whatever evidence we could, Mr. Chairman. We wrote several letters in an effort to get that information. After a period of two months or so we decided to send one of our own officials and obtained permission to send him. But no evidence at all has been produced to substantiate those remarks so far as trustees are concerned.


Erik Nielsen: So far as the trustees are concerned. But so far as the information which has been passed to federal officials, people with whom I have spoken, is concerned, if the minister has been keeping in touch he will know that this is not the case. There does exist evidence to substantiate Mr. Mercier's statements.


Louis-Joseph-Lucien Cardin: Available evidence?
June 16/ 1966


Erik Nielsen: Which has been made available. Here is another situation which exists. The minister is aware of this and I would be interested to know how he views it. The superintendent has certain information with respect to a trustee who is acting for a group of bankrupts-this time the province of Quebec is not involved-and this trustee, acting on behalf of one company, is suing himself as trustee acting on behalf of another company. In this situation the trustee plaintiff is suing the trustee defendant and the trustee in both cases is the same person.


Louis-Joseph-Lucien Cardin: I am not aware of that case.


Erik Nielsen: These bankruptcies are current.


Stanley Howard Knowles: Did he do it at arms length?


Erik Nielsen: I do not know how many hats this particular trustee has. I know he is looking after mere than the two bankruptcies.
The minister has dealt with trustees, and I should like to say one or two things about that situation. The observation I am going to make is by way of commentary on the answer which the minister gave to my question on the order paper, No. 577. Just in passing I might say that the answer to my inquiries with respect to complaints-


The Deputy Chairman:: Order. I regret to interrupt the hon. member but the time allotted for his speech has expired.


Some hon. Members:: Continue.


Maurice Rinfret: Is there unanimous consent to the hon. member continuing?


Some hon. Members:: Agreed.


Erik Nielsen: May I thank the committee members. I will try to be as brief as possible.
In reply to my inquiry with respect to the complaints received with regard to certain companies the minister said that if I would indicate the estates in which I was interested he would endeavour to look into the files in order to ascertain whether there was any information which could be made public. At the time of answering that question the minister may well have overlooked the names of five companies which I had placed on Hansard on February 28 in the debate which was then underway. I have not yet received any information in respect of any complaints which may have been received in connection with those five companies.
Bankruptcy Act


Louis-Joseph-Lucien Cardin: I suspect the hon. member has more information than I have.


Erik Nielsen: That may be so. I think that one of the legitimate complaints that can be made with respect to the trustee situation is quite evident in that portion of the answer of the minister to my question No. 577 which deals with the amount of the bond that the trustee is required to carry. The provisions of the Bankruptcy Act require a trustee to avail himself of bonds. In one instance a Montreal trustee is bonded for as low as $4,000. In another instance, again in Montreal, the trustee is bonded for as low as $6,000.
[DOT] (4:30 p.m.)


Louis-Joseph-Lucien Cardin: Could the hon. member say what the dates are?


Erik Nielsen: The trustee appointment in the $6,000 case was September 29, 1959, and in the $4,000 case it was March 20, 1962. But so far as I am concerned this makes no difference because my criticisms cut across governments going back prior to 1957.
In other instances the bonds are $10,000. Yet a reputable organization like the Canadian Credit Men's Association Limited is required to put up a bond of $50,000 or 500 per cent more. In other cases individuals have been required to put up $30,000 by way of a bond and there are instances of $20,000 being put up. The Guardian Trust Company is in the $10,000 class.
I feel that bonds put up by trustees who are often handling assets worth hundreds of thousands of dollars should be far more than $4,000, $6,000, $10,000 or even $50,000. Substantial bonds should be put up. I will not suggest amounts to the minister but certainly the amounts have been far too low. Perhaps some degree of uniformity might be sought in the application of the principles governing the setting of amounts required as bonds.
The minister did not mention whether any special re-arrangement had been made within the R.C.M.P. in connection with co-operation with the officials in Montreal, Toronto and Vancouver. It may well be that fraud squads are already operating in this specialized field now, but I feel that members of the committee ought to be told this.


Louis-Joseph-Lucien Cardin: Mr. Chairman, if the hon. member would permit me to speak, may I point out that the R.C.M.P. are working very closely with what we call bankruptcy squads

June 16, 1966
Bankruptcy Act
which are made up of investigators and auditors. The R.C.M.P. would be interested more particularly in investigating frauds. There is to be greater co-ordination between the superintendent's office and the officers of the R.C.M.P. who deal with bankruptcies so they can work as a team. It would mean that the bankruptcy squad would be made up of auditors, investigators and also the R.C.M.P. This would be on a national basis.


Erik Nielsen: I hope too that these squads will go into some of the existing files in the superintendent's office with respect to which investigations were requested and promised several years ago but have not been conducted to this date.
The seminars for the education of officials mentioned by the minister are an important and helpful addition to the approach to fraudulent bankruptcies. Not only are seminars necessary for the eduction of officials administering the act but some kind of informational effort should be made within the department to inform the public. All sorts of efforts are being made by organizations such as better business bureaux and the Canadian Credit Mens' Association Limited to keep the public informed of rackets involving door-to-door salesman and similar schemes. I do not go along with the minister when he says that the creditor is primarily taken in because of his eagerness to make a purchase. The minister knows how sophisticated these fraudulent operators are. One instance that leaps to my mind immediately is where a dummy corporation obtains an unlisted telephone number through three or four different interveners and then sends out a circular letter, not only to Canada but to other places, soliciting the purchase of commercial goods.
Often these operators give the telephone number of a so-called banker whom creditors can get in touch with should they want a reference. The unlisted number, of course, leads to a basement room in some apartment and a man sits there waiting for a telephone call. When the call comes he knows what he must answer. He has only to say one thing, namely, "Royal Bank", or "Bank of Montreal", or whatever other bank he chooses. The legitimate supplier says he wants to sell so many thousand dollars worth of product X. "What sort of credit rating has the company in question got?" The answer is: "Oh, marvellous. They are good depositors and always discharge their obligations." So the legitimate supplier hangs up, well satisfied that he has been speaking with an official of the bank.

Instead he has been talking to a dummy corporation.
We cannot blame the creditor for being so eager for a sale that he does not check out to the last degree. He checks as far as he can go. The only way in which such operations are going to be disbanded is by preventing the same individuals who operate in this way over and over again using either the facade of corporate liability or the convenience of being able to dump their nom de pret after 60 or 90 days. That can only be done on a centralized basis.
This brings up another area of federal responsibility. I am not sure of the constitutionality of what I am about to say in this regard because I have not done any research in depth. Surely there must be centralized responsibility for preventing the international traffic in commercial wares for fraudulent purposes.


Louis-Joseph-Lucien Cardin: If I may add a word, there is also communication between our own superintendent and our bankruptcy division and their opposite numbers in the United States in this field in order to cover this type of activity.


Erik Nielsen: Those are the immediate observations I have to make. I want to close on this note while the minister is here, because he was not here when I spoke last. I share with him his eagerness to correct wrongdoing wherever it occurs. But I say to him also, as I said to the members of the house when he was absent, in connection with our exchange of correspondence, that it is a wrong principle to operate on to place this House of Commons or the members thereof in the position where the onus is on the individual to do the investigating. This is not the function of members of parliament. It is not the function of any member of the house.
Rather than adopting the course which the minister did he should have said to his superintendent: Go back and examine your files to see whether you have received complaints from any individuals and if you have, investigate them. I submit that writing to a member of the house and asking him to disclose information given to him confidentially, because of very real fears expressed by a citizen, is the wrong course to follow. To acquiesce in the minister's view would mean the drying up of the freedom of access that now exists and must exist between the citizen and the member of parliament who has a duty to perform on behalf of the persons who
June 16. 1966

sent him here, indeed, whether they are from his own constituency or not. The free avenue of communication must be maintained. When it is possible for a member of parliament to function as any responsible citizen should, then certainly he ought to do just that.
I believe that even before the minister and I exchanged our correspondence-this is something that certain members of the press gallery did not take into account before writing their appraisals of the situation-there was information in the possession of federal officials in connection with fraudulent bankruptcies which information is also in my possession.
[DOT] (4:40 p.m.)
I think I can go that far. Just so that there
will be no misunderstanding about what has appeared in the press in connection with the co-operation which I have been extending to federal officials in this area, I have mentioned no names of individuals, no names of companies nor any names of places or areas in Canada except a broad general designation of two provinces and of two others to come. I do this because I have a desire to retain the integrity of current investigations, just as great a desire as the minister has because I want to see, as does he, the wrongdoers laid by the heels. But for those who make comments on the responsibility of any member of this house it would be a simple task to lift the telephone and ascertain the facts before letting their pens run away with their assessments.
It is often said that the two most important muscles that function without the use of the brain are the tongue and the heart. In the case of certain members of the press gallery I include the fingers that wield the pen. Fortunately that kind of comment was rare and there were some who were sufficiently interested in objectivity to make the inquiries of me that should have been made. So the minister has the assurance from me that whenever I assess my responsibilities as a citizen to be consistent with the obligations I feel I owe as a member of parliament cooperation will be forthcoming 100 per cent as it has been with regard to the 52 cases which are already before the officials.
I feel that no person should be subjected to a further runaround by reason of this juggling between federal and provincial responsibility. The public do not care who discharges the responsibility. They want a
Bankruptcy Act
remedy applied and so far as they are concerned they do not care whether it is the provincial or federal authority that has the power to supply that remedy, a view with which I am in accord 100 per cent. I thank members of the committee for granting additional time to me.


Mr. Gilbert:: Mr. Chairman, the members of the New Democratic Party agree with the amendments that have been introduced by the Minister of Justice, subject to comments which we will make on certain clauses of the bid.
After hearing the hon. member for Yukon speak of a royal commission I would be the first to oppose the appointment of a royal commission on bankruptcy. The only thing such a commission could do would be to make the matter a political footbaU. At this stage sufficient briefs have been presented by interested organizations that nothing would be gained by referring the question to a royal commission.
When the Solicitor General spoke on the bill the other night he asked that it be considered as non-controversial. I think what he meant was that it be taken to be nonpolitical. It is time we got away from political considerations when dealing with bankruptcy and directed our minds to the provisions of the bill because the Canadian public, especially Canadian businessmen, have for years been patient with regard to abuses that have been committed under the Bankruptcy Act. When one realizes that no change has been made in the act since 1949 and that two governments have witnessed the abuses that have taken place, one must realize it is high time that these amendments were passed quickly in order to test their workability.
When the minister spoke on the estimates of the Department of Justice he said he had set up a three-man committee to study a complete revision of the act. The present amendments are necessary to fill some of the flagrant gaps and cope with abuses that have been committed.
With respect to the government's approach to the matter of enforcement I hope we do not fall back upon the interpretation that the federal government's jurisdiction covers supervision and the provincial governments' jurisdiction covers enforcement. I have been encouraged by the steps taken by the minister to set up offices in Montreal, Toronto and Vancouver and to set up special squads to

June 16, 1966
Bankruptcy Act
deal with some offences committed under the act. It is not only necessary to have auditors and investigators but I think it is also necessary to engage corporate solicitors.
The minister has spoken about co-operation between provincial Attorneys General and the federal department. I think he should make representations concerning changes that are necessary in the companies act of each province to prohibit the submission of applications to incorporate companies by people who have committed offences under the Bankruptcy Act. This would be a necessary step to prevent some of the corporate frauds that are being committed.
The amendments with respect to the fraud provisions of the act and non-arm's length transactions are certainly welcome. Again, in the words of the minister, it is a question of enforcement because the amendments alone cannot solve the problem. It is enforcement plus the administrative set-up which are necessary to correct the abuses. The minister suggested that applicants for trustee licences should be examined by a board. We agree wholeheartedly and believe immediate steps should be taken to implement the suggestion. Enough offences have already been committed by trustees to warrant immediate action.
We also welcome the changes with regard to staff. The immediate future will be a testing time for all these changes, and when the revision committee makes its report we hope it will be submitted to a committee of the house where representations can be heard from the legal and business communities. That is all I have to say at the moment though I shall have more substantial remarks to make on particular clauses of the bill.
[DOT] (4:50 p.m.)
[Translation1


Mr. Foresi:: Mr. Chairman, I want to say at the outset that I support wholeheartedly the previous speaker's views, contrary to what the hon. member for Yukon (Mr. 'Nielsen) said, that a royal commission on fraudulent bankruptcies would be totally useless. The problem is well known; it is not a question of crying over what happened in the past but of taking steps to remedy the present situation.
As announced by the Solicitor General (Mr. Pennell) last Monday night, when moving second reading of Bill S-17, and as mentioned earlier today by the Minister of Justice (Mr. Cardin), this is an interim measure which is

introduced immediately to put a stop to certain abuses which have been noticed for a long time with regard to bankruptcies.
I regret that it has been impossible to propose immediately a complete revision of the Bankruptcy Act which has not been amended or changed since 1949, but I know that such a step will not be long in coming now.
As a matter of fact, for many years the population, the newspapers and a number of professional and intermediary associations have been asking the various successive governments, at the federal as well as the provincial level, to take all necessary steps to correct the present system and, as far as the federal government is concerned, to amend the Bankruptcy Act. It is not that the legislation itself is bad. In theory it might be excellent but in practice it does not meet and has not met the needs; therefore, it must be amended to suit the situation.
I must congratulate the present Minister of Justice who has finally introduced a bill which should improve things considerably although I deplore the fact that the complete revision of the act has been postponed. Until now, the present minister has certainly taken positive measures to meet the situation, as he mentioned a little earlier; I am thinking in particular of the appointment of a full time superior court judge in Montreal, the increase in staff at the office of the superintendent of bankruptcies, the sending of representatives in Montreal and Toronto and other steps which he mentioned himself a while ago.
The Bankruptcy Act is an important part, I would say an essential part, of our economic life. It is important that this legislation should keep pace with our modern economic world and meet its requirement, and I hope that the three-member commission created recently will soon make recommendations because the act in general still needs to be amended.
This legislation seeks to solve the most urgent problems. During the last war and several years afterwards, bankruptcies or assignments were not very numerous but since 1950 they have increased every year and, as a necessary corollary, the number of fraudulent bankruptcies have also increased. I will not take the time of the committee to give statistics on the number of bankruptcies; they are well known and I am sure that all hon. members are convinced of the importance, the urgency and the need to take the necessary action to fight with all possible means that social and economic evil.
June 16, 1966

The Mercier commission set up by the government of Quebec by Order in Council dated October 16, 1964, set forth in its report tabled in July 1965 what all those who, like me, in their experience, have known for a long time, that dishonesty, fraud and blackmailing were involved in many cases of bankruptcies, and that certain undesirable elements of the population had thus realized fantastic gains, often to the detriment of bona fide creditors, and the federal and provincial treasury. It is time that something be done to correct this intolerable situation which has spread throughout the country.
As many other members, I called, here and elsewhere, for major amendments to the present act, which proved inadequate to correct the abuses disclosed since a few years in that field. The administration of the act comes under the federal government, but the prosecutions come under the provincial government; there may not have been in the past enough co-operation between these jurisdictions.
Nobody will blame the governments if they join forces, as was suggested lately, to strike a lethal blow at the underworld and at the gangdom who batten on fraudulent bankruptcies. However, we need more than halfmeasures to succeed.
As I said a moment ago, the federal government has already taken certain actions which have been mentioned by the Minister of Justice, and I hope that the new superintendent of bankruptcies, with the additional powers given to him by the present act, will be able to exert a closer control over bankruptcies, especially if he is granted a competent, devoted and determined staff, who understand their duties. Expert investigators are necessary to go to the heart of the matter; very often they will have to deal with unscrupulous, dishonest people, who know the means to avert the law and superficial inquiries.
As all new legislation, in the matter of bankruptcies, this act has two main objectives: first, discharge a debtor who is no longer solvent because of unforseen circumstances beyond his control, and second, to allow for a better use or equitable realization of his properties, according to the creditors' rights.
Contrary to what used to be, when only trades people went bankrupt, nowadays the act applies to nearly everybody: big or small businesses, corporations or individuals, independent people or wage-earners. There are also
Bankruptcy Act
various classes of creditors, classes which often are no better off than the bankrupt himself.
All the range of bankruptcies must be taken into consideration. The present act provides improvements requested many times, especially by the bar and various professional bodies, and it certainly fills many gaps.
[DOT] (5:00 p.m.)
But any improvement of the Bankruptcy Act will be meaningless, unless steps are taken to strengthen its administration and application. That is essential; it is the key to the whole matter. And where the application of the act is concerned, the trustee obviously plays the leading role, without for that matter diminishing the role the creditors must play, even though they do not always play it. I do not want to attack all trustees, because most of them, at least I hope so, fulfil their role in protecting the interests of the creditors; but, unfortunately, too many of them forget it and, under the present circumstances, nothing else can be expected.
As a rule, debtors who resort to the Bankruptcy Act want to be freed of their debts under the best terms possible. There is no doubt that insolvency often results from uncontrollable circumstances and it is fair and desirable that the debtor be given a chance to start again in business, free from any obligations which might keep him from doing so. However, the number of bankruptcies is out of proportion with the justifiable cases. The trustee is considered by the debtors-and the trustee quite often considers himself-as the one who is supposed to obtain the discharge, instead of being the administrator of the assets of the bankrupt in the best interest of the creditors. It is natural and human for him to act in the interest of the one who hires and pays him. Man cannot serve two masters. As long as trustees are chosen by the debtors, as is generally the case now, they will be selected for the advantages they will bring their employers, namely the debtors.
The trustees who act otherwise are liable to lose their clients. Moreover, as I mentioned in the house on April 8, 1965, I consider that the major reform, better than any other, would be to provide for the replacement of trustees according to the needs of each bankruptcy district by one or more competent and specialized civil servants who would be well paid and whose sole purpose or interest would be to settle the bankruptcy submitted to them as efficiently and quickly as possible. In my
6500

June 16, 1966
Bankruptcy Act
opinion, when that essential improvement to the full application of the act is made, a considerable decrease of all bankruptcies, both legal or illegal, will be noted.
In this regard I refer to the Mercier report respecting trustees which speaks about the conflict of interest of the trustee who acts for the bankrupt, his client, and for the creditors, he has the responsibility to protect.
Mr. Chairman, if we do not accept this means, which is the best in my opinion, if we do not want to go that far, the act should be amended so that the creditors, in practice as in principle, may appoint the trustees in bankruptcies and proposals. As a rule, the creditors would then appoint reliable persons, trustees who have a good reputation. This act contains considerable improvements in this respect, in clause 5 and the following, particularly as far as bankruptcy proposals are concerned. At present, the debtor chooses the trustee in proposals, when he should be appointed by the official receiver after consulting with the main creditors. Besides, the proposal should first be filed with the receiver.
In the case of assignments, subsection 4 of section 26 of the present Bankruptcy Act provides this method of appointment of the trustee, but it is seldom applied as far as I know.
Consultation of the main creditors for the selection of the trustee should be compulsory since, once he has been chosen, the trustee is practically irremovable at the present time.
Mr. Chairman, it would take too much time to mention all the amendments which should be made to the Bankruptcy Act and I will only briefly comment on certain important clauses of this bill. The present legislation gives in fact a right and power of control to the creditors, especially to the inspectors appointed by them. They are often the first to blame, if they do not keep sustained interest in a bankruptcy or do not take the necessary means to discover and punish the fraud.
But in most cases the assets are not extensive and creditors are not ready to spend their own money to try to recover part of it in such a dubious way. Public authorities must therefore intervene to make the necessary inquiries. This legislation gives extraordinary powers to the superintendent to undertake inquiries not only about each bankrupt, but even before the filing of a petition in bankruptcy, if fraud is suspected.
In addition, clause 16 empowers the receiver to make an inquiry and compels the

trustee to submit certain reports. Those are major improvements which should give results if they are strictly and generally enforced as I hope they will be. The present legislation does not make a proper distinction concerning transactions made before the bankruptcy, at arm's length, to use the recognized expression, between related persons or a corporation, its representatives or shareholders. The Department of National Revenue has succeeded in defining the term and in making it specific in the Income Tax Act, thus substantially reducing the resulting loss of revenue. This bill should correct these situations, often technically legal, but not covered by what is commonly referred to as straightforward commercial practices.
Clauses 5 and 9 of the bill have brought material improvements to proposals made by insolvent persons, providing for the appointment of inspectors, and when a proposal is not accepted by the creditors, assimilating it to an assignment. At the present time, an insolvent person may, for several weeks, postpone any legal action simply by filing any proposal with a trustee. The provision under which a trustee must require the bankrupt to deposit part of his income for instance, upon request of a creditor, should also correct certain abuses, particularly in the case of personal bankruptcies.
Also amended, Mr. Chairman, and rightly so, were sections 114 and 115 concerning the summary administration of estates, that is where the assets are under $500, the summary administration which in the past, gave rise to notorious abuses. Such changes should assuredly make for a better administration of small estates. For my part, I think summary administration procedure should be provided for only in cases where unsecured liabilities are less than, let us say, $20,000.
These are the main changes to the Bankruptcy Act mentioned in Bill No. S-17 and I shall not deal with part X, or nearly one third of the bill, bearing on the methodical payment of debts, because it will apply only to the provinces that wish it. Since the province of Quebec already has similar legislation, I doubt that "la belle province" will request that it be applied within its territory.
Mr. Chairman, many other suggestions could be made for the improvement of the present deplorable situation, but I am sure this is an important step in the right direction, until the complete revision of the act can be commented upon, which, I hope, will not be too long delayed.
June 16. 1966

Mr. Chairman, before closing I have one word for the Minister of Justice who mentioned a while ago that he was considering transferring to the Exchequer Court the jurisdiction of bankruptcy cases. Without having gone deeply into the matter, I have some reservations to make at first glance, because a considerable extension to the Exchequer Court would be required, while we already have in all bankruptcy districts Superior Court Justices who are generally competent and who, at home, at least administer quite properly the bankruptcy legislation, and there are no undue delays and the cases are being heard. Besides, the fault lies not with the judicial administration of the Bankruptcy Act but rather in the enforcement of the act itself.
At any rate, I hope that we shall have the opportunity to comment on this point in particular when the overall reviewing of the Bankruptcy Act is soon before us.


Reid Scott: Mr. Chairman, I really just want to ask the minister to give us a report on a subject referred to in an article which appeared in the October 7 issue of the Toronto Globe and Mail. The article disturbed me very much and I should like to know what action was taken by the minister. It is headed "Police Link Seven M.P.'s to Bankruptcies Probe", and states:
A senior Montreal fraud squad investigator said yesterday that the trail of phony bankruptcies in Quebec leads into the House of Commons.
He also said that seven or eight men who had been members of parliament had been involved in bankruptcies which were under investigation. That to me is a very disturbing statement, as I am sure it is disturbing to the minister. The report then goes on to say that bankruptcies in Quebec and Ontario have connections with international crime and names a Cosa Nostra backed loan-shark racket in Philadelphia.
[DOT] (5:10 p.m.)
The minister will understand that allegations of this kind go far beyond the type of thing we are considering here. This is far beyond the scope of provincial administration even, because the article purported not only to make what I thought was a very wild charge against the House of Commons but went on to say that these bankruptcy rings were connected with international, syndicated 23033-4121
Bankruptcy Act
crime. To me this was most disturbing because it would raise the whole question of international crime which would clearly be beyond provincial jurisdiction. Because the then minister of justice of Quebec made similar statements, in the crusade he was conducting, about the connections between bankruptcies and international crime syndicates, I wondered what action the Department of Justice had taken on these allegations. Were they investigated, were these people cleared, was sufficient evidence obtained to disprove the allegations that bankruptcies were leading into the House of Commons, and what did the investigations disclose about the connections between these supposed bankruptcy frauds and international, syndicated crime?
Because I have had some opportunity in the past to study the problems of international crime I realize the very great implications of statements of this kind. Could the minister tell us what action was taken on the basis of these very serious charges and what were the results?


Louis-Joseph-Lucien Cardin: Mr. Chairman, I want to thank the hon. member for having raised this question. I can assure him that the article to which he referred was equally disturbing to the Minister of Justice and the government as it was, I am sure, to all Canadians. When the article appeared I immediately telephoned the assistant director of police in Montreal because the story purported to originate from Montreal. I was assured at the time that there was no basis at all for the story, that there was no evidence or even the beginning of an indication that members of parliament were involved in the fraudulent bankruptcies referred to. This telephone conversation was subsequently followed by contact with the R.C.M.P. and the director in order to ensure that this was quite so, that there was no evidence at all to substantiate this allegation.
So far as international crime being involved is concerned, there has been no indication of that either. There have been, as was mentioned, certain people who operate in bankruptcies in one province and another and change companies. These people are being actively investigated. But there was no foundation at all for the story that came out at that time. The fact that it came out during an election period might explain the reason for it having been given prominence, but there was really nothing to the story.


Mr. Lind:: Mr. Chairman, I agree with the previous speakers that Bill No. S-17 is a

June 16, 1966
Bankruptcy Act
provisional measure to correct certain abuses in the field of bankruptcy. As a past president of the Ontario Retail Lumber Dealers Association I should like to congratulate the Minister of Justice for presenting these amendments to the Bankruptcy Act. I am sure that small and large businesses and businessmen across Canada will welcome these changes.
1 should like to read into the record a few statistics which demonstrate the necessity for these changes being made. We all realize that the act was last amended in 1949 and these are the first amendments since that time. For this reason I should like to read into the record the losses that have occurred in Canada through bankruptcies. In 1950 there was a loss of approximately $25 million. In 1955 the loss through bankruptcies had jumped to $53 million. By 1960 there was a further increase over 1955 to $174 million. Then in 1965 it jumped to the amazing figure of $392 million, which did not include the 40 businesses forced into receivership by the collapse of Atlantic Acceptance Corporation.
In October of 1964, when I was president of the Ontario Retail Lumber Dealers Association, I had the privilege of presenting a brief to the then minister of justice. In that brief we stated:
The area of greatest need for changes in policy is in our opinion establishment of new rules applying to transactions between persons not dealing with each other at arm's length, to eliminate apparently deliberate frauds perpetrated on creditors. These changes are greatly needed.
We said these changes were greatly needed for the protection of creditors and the reorganization of the office of the Superintendent of Bankruptcy. I wish to thank the Minister of Justice for having instigated the changes in the office of the Superintendent of Bankruptcy involving the appointment of registrars in Toronto and Montreal and extending this program to Vancouver. This is a step forward so far as businessmen are concerned.
I also agree wholeheartedly with the complete investigation of trustees in bankruptcy, and I am thankful that the minister has instigated a regular audit. I believe the need for this provision can be demonstrated in the many briefs which have been presented over the years in connection with this matter. I should like to auote from one in particular. The Canadian Lumbermen's Association presented a brief to the then minister in which they stated that defaulted liabilities in 1960 had risen to $174 million. In the fall of 1962 the Ontario Retail Lumber Dealers Associa-

tion presented another brief in which they pointed out to the then minister the seriousness of the abuses of the Bankruptcy Act. At the Canadian Lumbermen's Association convention in January, 1965, this question was dealt with.
I should like to point out to the minister that in 1959 certain lumber dealers got together and petitioned the minister to look into a situation that occurred in the city of Montreal where $250,000 worth of goods had disappeared. The superintendent was then requested to call in the R.C.M.P., which he did. Then they received a ruling from the minister of justice of the time that since the superior court of Quebec had established that there was evidence of fraud and had authorized the creditors to take legal action, the federal authorities did not have anything more to do with the case. I am firmly convinced that the administration of the Bankruptcy Act is at present the duty of the provincial attorneys general. I hope that under the new act-and I do not see why it should not facilitate matters-the Superintendent of Bankruptcy can aid the provincial attorneys general in correcting the abuse of fraudulent bankruptcies.
[DOT] (5:20 p.m.)
In closing I wish to thank the Minister of Justice for presenting Bill S-17. I think it will give further and badly needed protection to businessmen throughout Canada and I look forward to seeing the new amendments that will be brought in from time to time. I urge on the Minister of Justice the importance of reviewing this act more often rather than letting it wait for a period of 16 years as has been the case since it was last reviewed.
1Translation1


Mr. Latulippe:: Mr. Chairman, I am glad to have the opportunity to discuss Bill No. S-17, an Act to amend the Bankruptcy Act, which is presented by the Minister of Justice (Mr. Cardin).
We were anxiously awaiting the proposals to amend the Bankruptcy Act. This legislation, as we know, has been a source of unfortunate events for many Canadians and some even found themselves in a predicament. I do not think the Bankruptcy Act has been amended since 1949. Some amendments have been made in 1949 but there has been no complete overhaul ever since. The 1949 amendments were not such as to improve the act; on the contrary they have made it possible for unscrupulous citizens to evade the law and to commit various offences.
June 16, 1966



Mr. Chairman, I have read practically the whole bill and I have found it quite complex. I do not know to what extent it will still allow unscrupulous citizens to rob the public by various means. The big swindlers in fraudulent bankruptcies are still at work in Canada and I think the Minister of Finance will have to bring in regulations or bills with teeth in this respect. Severe sentences and penalties will have to be provided to deal with those who break the regulations. This state of affairs can be tolerated no longer. As a matter of fact it has now reached a point where honest citizens, lawyers and trustees are so much afraid that they will not even take bankruptcy cases. I am therefore asking the Minister of Justice to consider the suggestions I have made to him. I think the R.C.M.P. should look after serious cases for a while.
As a matter of fact, I was informed at the beginning of the week that a businessman was getting ready to go bankrupt and that another one had offered to pay 50 per cent to the creditors and he would take over the business. Those swindlers have all kinds of ways to take over businesses and make creditors lose incredible sums of money. In 1965, according to statistics, manufacturers and businessmen lost nearly half a billion dollars. On the other hand, if my memory serves me right, the federal government lost $152 million in tax revenue. The Provincial Government also lost significant amounts of money. Now, the situation is more serious than is believed.
I commend the minister for having taken certain steps with a view to amending this act, this despicable act, but his amendments are most complex. Should we have all that is necessary to enforce these reforms, they might bring about a big change or improvement with regard to fraudulent bankruptcies.
There are several bankruptcies, but a number of these are fraudulent. I could point out several kinds, but I know that the house and the minister are well aware of this. All that I ask for is an end to fraudulent bankruptcies in Canada. I wish honest people could live decently. I want the people to be protected by the act. However, the act is so confused and so complicated, while racketeers are quite familiar with it and resort to every possible means to elude it. I ask the minister to do his utmost to improve the act, because individuals find it very hard to protect themselves.
We have reached the point where we ask all public bodies and all lumber dealers to bring pressure to bear-as the member for
Bankruptcy Act
Yukon (Mr. Nielsen) did-so that the bankruptcy act be reviewed. The review of this act has been urged for several years. The minister knows all the names of those companies asking for justice. I know he will use every possible means so that we may finally live honestly in a country with abundant riches. In a country as wealthy as ours there is no reason why half of our business undertakings should go bankrupt. It is not normal and such a situation should no longer be tolerated.
I thank the minister for everything he has done up to now and for having made those changes in the act. On the other hand, I ask once again that action be taken to have it enforced.
[DOT] (5:30 p.m.)
1English1


Francis Andrew Brewin: I do not propose to prolong the debate, Mr. Chairman, I agree entirely with the remarks of my colleague, the hon. member for Broadview, that this is a very useful bit of legislation which is long overdue. We certainly do not want to waste time speaking about the need for it because that is widely recognized. I have spoken about it at other times.
I merely want to raise a question with the minister of a technical or constitutional nature which might be raised when the individual sections come before the committee. I should like to put it to him now so that if he has not looked into it he may take the opportunity of doing so. I do not want to refer to the clauses in detail but clause 21 introduces a new part X into the act dealing with the orderly payment of debts. There is a series of new sections 173 to 198, dealing with this matter. I believe the same proposal was in a Senate bill a few years ago.
Here is the problem I want to put to the minister. As I understand it, the authority of the federal parliament to deal with this subject rests in section 91 under the heading of bankruptcies and insolvencies. I do not believe we have any right to deal with what would normally be civil rights unless they come within the purview of bankruptcy and insolvency. The proposed section 173 defines a debtor as not including a corporation. However, in no way is part X restricted to insolvent or bankrupt debtors. In theory, therefore, any debtor, whether insolvent or otherwise, who comes within the definition and who wants to apply for a consolidation order with respect to his debts, would have

June 16, 1966
Bankruptcy Act
the right to apply. The Bankruptcy Act itself defines debtor in section 2, subsection (i). This definition includes an insolvent person.
In other words, what I am suggesting to the minister is that, unless you include somewhere in the definition a clause making it clear that it is an insolvent debtor who is being dealt with, you run the grave risk of some court saying these arrangements you have made are invalid because you are going beyond the field of insolvency. I know there have been cases which have dealt with the problem of provincial legislation which extended into the field of bankruptcy and insolvency. This legislation was not good legislation according to the court decision. I suggest there is a real danger of the converse here. I believe it is important to small, personal debtors to have this right to have their debts consolidated. The legislation is very practical and worth while, so I would not want to see it fall because of legal or technical grounds.
It may be that the minister has had this matter looked into and has received opinions. I do not profess to have studied the matter in great detail. However, I recall that when it came up before I had similar feelings of doubt. I wonder whether it could be looked into? I believe the difficulty could be cured simply by having a definition of debtor in this part. There is already a definition of debtor which excludes a corporation. We could make it clear the provision applies to insolvents. It could be defined very clearly to bring them within the act by referring to people who do not pay their debts. After all, we are all debtors in these days of credit. If the definition is too broad you may run into a constitutional objection.


Louis-Joseph-Lucien Cardin: I would be happy indeed to have this looked into. I hope that we will be able to get through the bill before six o'clock. In any event, I will make sure that this point is looked into carefully by my officials.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Investigations of inquiries by superintendent.
Erik Nielsen: Is this the place where the minister was going to introduce an amendment which I hope he will not introduce?


Louis-Joseph-Lucien Cardin: Yes, Mr. Chairman, this is the place where I stated I would introduce an amendment concerning a subsection put in by the other place. It has to do with subsection 8

of the new section 3A. It is felt that by introducing a comparable section to the one in the Income Tax Act dealing with solicitor-client privilege we would in fact frustrate the whole purpose of the investigation by the superintendent or his examination of records and documents in bankruptcy matters.


Erik Nielsen: How would that be frustrated?
[DOT] (5:40 p.m.)


Louis-Joseph-Lucien Cardin: If there is a comparable section in this act to the one in the Income Tax Act, those documents which were considered to be privileged would not be subject to examination by the superintendent. It is felt that the purpose of the bankruptcy investigation is different from that which would be involved under the Income Tax Act. It is felt that by having this section in the act the people who are involved might hide behind this particular privilege and hide documents which would contain evidence of fraud.
As the hon. member knows, some of these transactions are of a rather legalistic nature. There are unscrupulous lawyers who would not hesitate to use this provision in order to hide those documents which would make known transactions which would in fact be fraudulent. I think that under these circumstances, and because of the rampant irregularities that have been committed in the past, if there is any benefit of doubt to be given it should be given on the side of severity rather than leniency. As I mentioned before, the whole act is being revised. I imagine the revision will be completed toward the end of the year and at that time the whole thing may be looked into again.
I might also mention to hon. members that sitting in the galleries at the moment are the three members of the Bankruptcy Act revision committee, and if anyone has any suggestions which they want to make I invite them to do so.


Erik Nielsen: Before the minister introduces the amendment may I say that this is one of those dangerous, sweeping powers which the other place attempted to remove because of the repugnancy which they feel is inherent in the amendment. If the minister will give us his assurance, as I am sure he will, that the committee which will be making the recommendations and final revisions will take a second hard look at the usefulness of continuing this particular power, among others, and if the situation has been satisfactorily resolved by the time the amendments come before the house, with perhaps a revocation
June 16, 1966

of this power, then I think we could act on that assurance and support the amendment which he intends to introduce.


Louis-Joseph-Lucien Cardin: I am concerned about the power involved, Mr. Chairman. However, I am also very much concerned about not doing anything to hamper the work which we want the superintendent to do. We do not want to leave any loopholes in the administration of the act which would continue or permit the continuance of irregularities. I am quite sure that in the revision of the act this particular section would be very closely looked at.


Francis Andrew Brewin: Mr. Chairman, I should like to support the elimination of the subsection as proposed by the minister. No doubt the members of the other place who introduced this point into the bill-it was not originally there-had excellent motives and desired to protect certain situations. But if you are going to give the power of inquiry on the one side and then hamper it by all sorts of restrictions on the other, I do not think you will have an effective inquiry. I hope that if we are going to err it will not be in extending tenderness to those being investigated. If we are going to err in this connection we should err in giving adequate powers of enforcement and investigation.
I was a little surprised to hear that the hon. member for Yukon who is so zealous about uncovering fraud, is so ready at this stage to acquiesce in an amendment which as I see it can only have a hampering effect. I hope that the minister's determination will not in any way be swayed by what has been said in this committee.


Erik Nielsen: Mr. Chairman, perhaps I did not make myself as clear as I should have. I have been completely misunderstood by the hon. member for Greenwood. I, like him, wish to see adequate powers put into the hands of the superintendent. I have in mind one particular document in a solicitor's office that I should very much like to see in the hands of the superintendent. If this power would give the superintendent the facility to lay his hands on this kind of document, I for one would be in full support of it. Let me make my position very clear in this connection.


Francis Andrew Brewin: If I have misunderstood the hon. member then I apologize to him. I thought that what I said represented the effect of what he had said, but if I am wrong
Bankruptcy Act
I certainly apologize. However, let me say that although the solicitor and client relationship is important, it is not so important that it should be allowed to be used as an instrument for fraud.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I wonder
whether I might ask the Minister of Citizenship and Immigration to move, seconded by the Postmaster General:
That Bill S-17, an act to amend the Bankruptcy Act, be amended as to clause 3 thereof by striking out lines 31 to 42 on page 5 of the bill.


Jean Marchand: I so move.


Erik Nielsen: Why does the minister not move it himself?


Louis-Joseph-Lucien Cardin: I understand I cannot. I moved the bill.


Mr. Goyer:: Mr. Chairman, I should like to move a simple amendment to the French text where the seventh line of section 3(a), subsection 1, reads as follows:
11 est loisible au surintendant, s'il lui apparalt que 1'affaire peut, par ailleurs, n'etre l'objet d'aucune recherche, faire ou faire faire-
Now, in correct French we should say: de faire ou de faire faire.
Consequently, I move, seconded by the hon. member for Rouville (Mr. Pilon), that section 3(a), subsection 1, be amended by adding after the words: n'etre 1'objet d'aucune recherche
The following words: de faire ou de faire faire.
Instead of the words:
Faire ou faire faire.
[English1


Herman Maxwell Batten: The committee will deal first with the amendment moved by the Minister of Citizenship and Immigration and then deal with the second amendment. Shall the amendment carry?


Some hon. Members:: Carried.


[Stage Direction]
Amendment agreed to.
Herman Maxwell Batten: I understand the amendment moved by the hon. member for Dollard makes a grammatical change in the bill. Shall the amendment carry?


Some hon. Members:: Carried.


[Stage Direction]
Amendment agreed to.
[Stage Direction]
June 16, 1966
Bankruptcy Act
Clause as amended agreed to.
[DOT] (5:50 p.m.)
Clauses 4 and 5 agreed to.
On clause 6-Acceptance of proposal by creditors.
Louis-Joseph-Lucien Cardin: May I point out that there might be an amendment to make the reading of section 31, subsection 2 a little more clear. Instead of "may or may not" I think the words should be "may but need not". I shall ask the Minister of Citizenship and Immigration to amend the bill, by striking out in the appropriate section the words "or may not" and substituting the words "but need not".


Erik Nielsen: All we have to do is put the word "may" in.


Louis-Joseph-Lucien Cardin: I would not want to think that my draftsman put those words in for nothing.


Erik Nielsen: Can the minister explain why they are there?


Jean Marchand: I move:
That Bill S-17, An Act to amend the Bankruptcy Act, be amended as to clause 6 by striking out the words "or may not" in line 7 on page 7 of the Bill and by substituting therefor the words "but need not".


Henry P. Latulippe: I should like to ask the
minister a simple question concerning clause 6, which reads as follows:
Section 31 of the said Act is repealed and the following substituted therefor:
Subject to the rights of secured creditors, the creditors may by special resolution resolve to accept the proposal as made or as altered or modified at the meeting or any adjournment thereof.
In a bankruptcy, when a creditor accepts a proposal and someone else provides the money for the proposal, after the proposal has been accepted, other stores and enterprises are competed against by sales at ridiculously low prices which are very difficult to beat. This happened in several cases that I know of in the province of Quebec.
Individuals provide the capital and obtain the stock, equipment, materials or furniture at half-price, or at 35 per cent and float the enterprise again, harming others by selling at ridiculous prices.
Is the minister considering a step which would put an end to these harmful practices?
[The Chairman.]


Louis-Joseph-Lucien Cardin: Mr. Chairman, I do not know whether I have understood correctly the question put by my hon. friend, but when a proposal is made and accepted by the creditors, it must be maintained right up to the end.
If there is a delay in doing what the proposal stipulates, or if the conditions of the proposal are changed, consequences follow automatically as if the debtor were bankrupt. Therefore, if the proposal is not accepted or if the debtor does not proceed with the proposal as agreed the consequences are tantamount to a real state of bankruptcy.
Does this answer the question put by my hon. friend?


Henry P. Latulippe: Except that there is no regulation to provide that, because there are injustices done on that side. When a proposal is made and another individual puts up the capital to buy the goods at half price, or at one fourth of the price and when, after that, the same individual competes with others for one year, two years and even more, there is something wrong. I know that it is difficult for justice to provide for everything, but perhaps the minister could And some way to give a little protection to the citizens.


Louis-Joseph-Lucien Cardin: Mr. Chairman, it seems to me that the trustee and the inspectors who can be appointed in cases of proposals could precisely prevent the kind of fraud referred to by my hon. friend.
[English1


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
On clause 7-Appointment of Inspectors.
Herbert Wilfred Herridge: Mr. Chairman, I must confess I rise as a layman with bitter experience, so far as bankruptcies on the part of other people are concerned. Section 32A under clause 7 reads:
The creditors may appoint one or more, but not exceeding five, inspectors of the estate of the debtor, who shall have the powers of an inspector under this act but subject to any extension or restriction of those powers by the terms of the proposal.
I might inform the minister of one occasion, where, as one of the creditors, along with other people I attended a meeting called by an administrator. We got the trustee appointed. We found out that the trustee who was appointed at the meeting of creditors had gone around and solicited a number of big companies' proxies in Vancouver, and we were outvoted on this account, the Canadian
June 16. 1966

Pacific which I represented locally, and some other tugboat owners.
The interesting part of all this is that I was appointed an inspector afterwards-I do not know how it was done-by the Superintendent of Bankruptcy. I knew what had gone on, and I objected to everything. I would not sign anything. I wrote letters to the trustee in Vancouver and told him what I thought about everything because, you see, I was the only one who had personal knowledge of the whole situation. What I said as an inspector was ignored completely, and when they sent me some form to sign I said I would not have anything to do with it. The trustee reported to the Superintendent of Bankruptcy saying "For some strange reason or other Mr. Herbert Wilfred Herridge as the inspector refused to sign this form." I want to know what are the duties of an inspector under these circumstances? I did not get anywhere, and I was a very poor man at that time- poorer than I am today. I went to the expense of hiring a court reporter. Just imagine a poor rancher hiring a court reporter. I wanted to be sure that everything was taken down at the hearing. I have the record upstairs, and it is most interesting reading. However, I could do nothing about the matter.
We were badly informed by a lawyer who was a scoundrel. We never got over that.


An hon. Member:: All of them are.


Herbert Wilfred Herridge: Not all of them, there are some honest lawyers. We could never make heads or tails of the situation. When I came to Ottawa I got the brush-off. What are the duties of an inspector under the Bankruptcy Act? I have never been able clearly to find out what they are. Could the minister tell the committee?
[DOT] (6:00 p.m.)


Louis-Joseph-Lucien Cardin: Mr. Chairman, I am not sure that I am aware of the particular case to which the hon. member refers. As he knows, of course, the inspectors are named largely by the creditors and the trustee. This is to ensure that transactions undertaken for the realization of debtors' assets are carried out honestly and fairly. It is an unusual procedure, and I am rather surprised the hon. member should say that the superintendent actually named the inspectors. If he will give me some more information I shall be happy to look into the matter, although I understand it occurred some time ago.
Proceedings on Adjournment Motion


Herbert Wilfred Herridge: It was 30 years ago, but it was on account of the creditors and their confidence in the hon. member for Kootenay West that I was appointed inspector by the Superintendent of Bankruptcy.


Herman Maxwell Batten: Order. It being six o'clock and in order that the house may proceed to the consideration of private members business it is my duty to leave the chair.


Louis-Joseph-Lucien Cardin: I wonder whether the committee would give unanimous consent to continuing?


Herman Maxwell Batten: Order. If there is to be discussion on what is to be done with private members hour it should take place with the Speaker in the chair.


Michael Starr: I think the minister meant if you would just not see the clock.


Herman Maxwell Batten: Order. The Chair would have to ask for how long it would not have to see the clock. The proper procedure is for me to leave the chair and carry out the wishes of the house in the regular fashion.
Progress reported.



THE ROYAL ASSENT

Mr. Deputy Speaker:: I have the honour to inform the house that the following communication has been received:
Government House Ottawa
16th June, 1966
Sir,
I have the honour to inform you that Hon. Robert Taschereau, P.C., Chief Justice of Canada, acting as Deputy to His Excellency the Governor General, will proceed to the Senate chamber today, the 16th June, at 9.45 p.m., for the purpose of giving the royal assent to certain bills.
I have the honour to be,
Sir,
Your obedient servant,
A. G. Cherrier
Assistant Secretary to the Governor General



PROCEEDINGS ON ADJOURNMENT MOTION


Mr. Deputy Speaker:: Pursuant to provisional standing order 39A it is my duty to inform the house that the questions to be raised at the time of adjournment tonight are as follows: the hon. member for Sherbrooke (Mr. Allard), Public Service-concerning a

June 16, 1966
Bankruptcy Act
bonus to bilingual employees; the hon. member for Winnipeg North Centre (Mr. Knowles), Public Buildings-Ottawa-height proposed defence headquarters; the hon. member for Lotbiniere (Mr. Choquette), Canadian Broadcasting Corporation-concerning a broadcast.
It being six o'clock the house will now proceed to the consideration of private members business as listed on today's order paper, namely private bills, notices of motions (papers) and public bills.



BUSINESS OF THE HOUSE

Louis-Joseph-Lucien Cardin: Mr. Speaker, I wonder if this might be the time when I may ask Your Honour not to see the clock so that we may be able to finish our work in committee.


Mr. Peters:: Mr. Speaker, I suggest that the minister ask in the proper manner, that we waive private members hour today. That would receive our support.


Louis-Joseph-Lucien Cardin: I would be agreeable to that, Mr. Speaker.


Mr. Deputy Speaker:: Does the house agree to defer private members hour for today?


Mr. Cameron (High Park):: Mr. Speaker, I have a private members bill that I am anxious to proceed with today. However, I would certainly like to co-operate with the Minister of Justice, and I would therefore suggest that we proceed on the basis that, if we conclude in committee before seven o'clock, we should revert to private members business.


Erik Nielsen: Mr. Speaker, the amendments to the Bankruptcy Act are an emergency piece of legislation. I am sure all hon. members would like to see it passed, and passed quickly. We want on this side to co-operate 100 per cent and we are in favour of the minister's suggestion.


Mr. Deputy Speaker:: Does the house agree that private members hour be deferred and that the house revert to the business that was interrupted at six o'clock?


Some hon. Members:: Agreed.



BANKRUPTCY ACT


[Stage Direction]
The house resumed consideration in committee of Bill No. S-17, to amend the Bankruptcy Act-Mr. Cardin-Mr. Batten in the chair.
Herman Maxwell Batten: When the committee was interrupted at six o'clock clause 7 was being considered.


John Gilbert: Mr. Chairman, section 32A in this clause reads:
The creditors may appoint one or more, but not exceeding five, inspectors of the estate of the debtor, who shall have the powers of an inspector under this act but subject to any extension or restriction of those powers by the terms of the proposal.
I understand this is the first time that creditors have been given the right to appoint inspectors under the proposal. Has the minister given consideration to the payment of travel expenses, and fees for the inspectors?


Louis-Joseph-Lucien Cardin: I did not catch the last part of the question.


John Gilbert: This is the first time creditors have been given the right to appoint inspectors under a proposal. If the inspectors do a proper job they will incur travelling expenses and so forth, and should be paid fees for their services. Has the minister given consideration to this, or could it be referred for further consideration to the committee of three who are in the gallery?


Erik Nielsen: Before the minister replies may I point out that clause 8(4) covers the matter since it provides:
-for the payment of all proper fees and expenses of the trustee on and incidental to the proceedings arising out of the proposal-
The expenses, as I understand the amendment, would be paid out of the estate in the ordinary way.


John Gilbert: That particular clause only refers to the fees and expenses incurred by the trustee.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I shall have the matter looked into, but I would imagine that the inspectors, even if it is a proposal, would be treated very much as if it were an assignment.


Mr. Ballard:: Under clause 7 the proposed new section 32B implies that where the creditors refuse to accept a proposal made by an insolvent person, the insolvent person automatically becomes a bankrupt on the issuance of a certificate of assignment. Do I interpret this to mean that it precludes the possibility of an alternative or second proposal being made by an insolvent person?


Louis-Joseph-Lucien Cardin: I would imagine that if the insolvent person does not live up to the
June 16, 1966

proposal, or it is felt that he is unduly delaying the implementation of a proposal, it would be considered as an assignment. This of course is to avoid the undue delays that have been experienced in this area in the past.
[DOT] (6:10 p.m.)


Harold Raymond Ballard: Mr. Chairman, being a layman I am a little confused by the answer given by the minister. I think a reading of this section would suggest that if the creditors refuse to accept the proposal when it is presented initially and a certificate of assignment is issued, possibly before any transactions have taken place under the proposal, this would preclude an insolvent person from making an alternative proposal which would be acceptable to the creditors and which would work to the advantage of the creditor and the insolvent person himself.


Louis-Joseph-Lucien Cardin: I would think, Mr. Chairman, that if there seems to be good will on the part of the insolvent person, and he makes a proposal which is rejected and makes another one in good faith, it could be considered, but what we are trying to avoid is what has happened in the past where an insolvent person makes a proposal, does not live up to it and in the meantime his assets are dissipated.


Harold Raymond Ballard: Would the minister say positively that in the circumstance of a first proposal being rejected by the creditors the insolvent person at that point in time would have an opportunity to make a second or subsequent proposal?


Louis-Joseph-Lucien Cardin: Well, yes; I think there would be the possibility of the person making another proposal provided it were done in a reasonable time.


[Stage Direction]
Clause agreed to. Clauses 8 and 9 agreed to.
On clause 10-Salary, wages, etc. to bankrupt.
John Gilbert: Mr. Chairman, clause 10 containing the new section 39A is an entirely new provision. The discussion that took place in the other place indicated that the trustee already has power under section 39 of the act to obtain an order with regard to the income of the bankrupt subsequent to the bankruptcy. Many persons think that this new section will be abused, that some trustees will take advantage of it and that it will be a regressive step which will favour the commission agencies and the trustees.
Bankruptcy Act
I do not think we can oppose the principle
that a person who has become bankrupt, especially a personal bankrupt, should be made to pay part of his income if he has a substantial income after the bankruptcy. However, there seem to be many apprehensions with regard to the use of this section. There was a suggestion that the word "shall" in the seventh line of this provision be changed to "may" to make it permissive. I am wondering what are the thoughts of the minister in this regard.
The second and more important point is the question with regard to wage assignments. Many persons nowadays who give credit insist on a wage assignment. If a person is bankrupt and has made a wage assignment the creditor can still enforce the wage assignment regardless of any bankruptcy. I am wondering what position the Minister of Justice takes in respect of these matters.


Mr. Olson:: I am a little apprehensive, Mr. Chairman, about the application of the provisions of the new subsection 2 when bankruptcies occur where there is absolutely no fraud or anything of that nature involved. I am thinking of a bankruptcy which has occurred because of misfortune or because of action completely beyond the control of the insolvent person. These provisions do in fact provide that salaries, wages and so on cannot exactly be confiscated but at least there can be some claim made on them after the bankruptcy. I wish the minister to know that we are concerned about this. No doubt there have been cases where there has been a wrongful transfer of assets which has contributed to income after the bankruptcy and certainly this income should be included in the assets to which the creditors have access. But there is no distinction made in this section except that the court may make a determination having regard to family responsibilities and so on. When this is put into law it will provide a means whereby wages, salaries and so on of an insolvent person can be claimed after the bankruptcy.
I think this is quite a wide departure from what we have considered in the past to be the end of an insolvent situation by reason of all the assets of the individual having been distributed at the time of the bankruptcy. This is all I am going to say, but I hope that perhaps this provision can be applied in such a way that it will not be abused. I also hope the minister realizes there is a problem when there is a bankruptcy which does not result from any fraud or wrongdoing.
Bankruptcy Act

June 16, 1966


Mr, Laflamme:: Mr. Chairman, with regard to clause 10, which says-
-an order directing the payment to the trustee of such part of the salary, wages or other remuneration as the court may determine having regard to the family responsibilities and personal situation of the bankrupt.
I respectfully submit to the minister that this wording seems much too vague and gives a lot of leeway indeed. There is some kind of legislation-at least in the province of Quebec -which provides a limit on the portion of a salary to be garnisheed and, of course, the phrase-
-having regard to the family responsibilities and personal situation of the bankrupt.
-often means, in some cases, that no part of the salary shall be garnisheed.
The principle in itself is that a bankrupt, even though of good faith, has made his creditors lose money and must just the same pay them back with part of his salary. In principle, I do not think that anyone can object to that, but how will the bankrupt's family responsibilities and the personal situation be taken into account. I respectfully submit that such a text must be sufficiently clear and must not come into conflict with other legislation where it is stipulated that part of the salary can be garnisheed.
Moreover, in that regard, I respectfully submit that a maximum should be set. For instance, in the case of a bankruptcy where 25 or 50 per cent of the debts have been paid, I wonder if it is necessary then to institute proceedings against a debtor who failed in business in good faith and who would still be forced to give away the part of his salary subject to garnishee. It seems to me that when a debtor has met his obligations, at least to a great extent, steps should be taken to prevent part of his salary from being garnisheed, according precisely to the proportions set in that case. I think that, in general, that text is too vague and must be linked to certain standards, maximums and minimums within which something could be done.
[DOT] (6:20 p.m.)


Yves Forest: Mr. Chairman, in this corner some have objected to clause 10, particularly because they thought that personal bankrupts did not constitute a problem in Canada, and I see that the Superintendent of Bankruptcy has produced statistics showing that, from 1955 to 1964, personal bankrupts had

doubled in Canada and that it constituted a major problem. I think so too.
At the present time, the bankrupt can be required to deposit with the trustee a certain portion of his salary, but unfortunately he very seldom does, and creditors have to apply to the court for an order directing the bankrupt to deposit with the trustee the portion of his salary subject to garnishee.
But the bill is noiy doing away with that procedure and the trustee will have to apply to the court for an order to this effect and this, of course, will not prevent the bankrupt from requesting his discharge at a given time.
Therefore, I do not agree with the hon. member who dealt with this matter and I think this section should remain as it now appears in the act.


Erik Nielsen: Mr. Chairman, we have waited far too long as it is to be confronted with any suggestion now of watering down effective legislation to meet a scandalous situation in this country. Having said that. I want to say that we will support the government's desire to see this proposed section pass unchanged.


Louis-Joseph-Lucien Cardin: Mr. Chairman, we are of course concerned with both sides of the coin, and I wonder whether it would be helpful to explain how the department has looked at this problem. We feel that in this way the trustee would be, if directed by the inspector or the creditors, obliged to apply to the court to decide whether the bankrupt should pay the trustee for the benefit of the creditor a certain portion of his income, whatever the source. The courts have held that by the effect of section 39A(3)(b) such portion of the salary that is subject to that procedure by legal process is vested in the trustee. This, however, does not apply to future and personal earnings which are not of a fixed sum. The amendment we are now bringing forward will correct this.
Similar judgments have also held that all of the seizable portion of the salary of a bankrupt is vested with the trustee and that the courts have no jurisdiction in that respect. The amendment will give some discretion to the courts in respect of the portion of the income to be deposited with the trustee, which will be set by the courts having regard to the family responsibility and personal situation of the bankrupt.
I understand there has been considerable abuse in this area in the past and it was felt
June 16, 1966

that if a portion of the salary was made con-tributable to the bankruptcy it would indeed be very helpful. On the other hand, in order to avoid abuses in this area the court would have to make sure that no abuse was perpetrated in either direction.


Horace Andrew (Bud) Olson: Mr. Chairman, I do not take any more exception to the clause than I have taken but, as the hon. member for Broadview said, it involves an entirely new concept so far as the Bankruptcy Act is concerned. There is no question that when there is fraud, gross negligence or anything of that nature which contributed to the bankruptcy some justification exists for taking this action. In relation to what the hon. member for Yukon has said, we are as anxious as any other group in this house to make changes in the Bankruptcy Act so that these fraudulent practices can be dealt with adequately, but there is nothing in the new proposed section 39A which states that this provision shall only be applied where fraud, gross negligence and so on are indicated. I am not saying the provision will always apply because there is a discretionary power in so far as the courts are concerned, but there is nothing to prevent it from being applied in all cases where there is fraud and negligence involved.
I am not going to take any further exception to the clause, but I think the application of this new section must be handled very carefully so it will not be used in violation of what has been regarded as the proper application of the law in respect of bankruptcies.


[Stage Direction]
Clause agreed to.
Clauses 11 to 20 inclusive agreed to.
On clause 21-Definitions. "Clerk." "Court."
Herman Maxwell Batten: I should like to ask members of the committee how they wish to carry on the discussion on clause 21 which deals with some additions to the act. There are a number of new sections proposed. Since there is only one clause before the committee, is it the wish of the committee to consider the whole clause or to consider each new proposed section separately?


Louis-Joseph-Lucien Cardin: Mr. Chairman, I should like to propose an amendment before we give consideration to Part X. There must necessarily be a renumbering of the clauses.
This amendment results from many representations that have been received regarding the fact that federal companies which are insolvent use the Winding-up Act instead of
Bankruptcy Act
using the bankruptcy legislation. There has been considerable concern in the past about this procedure, and the amendment I should like to propose to the committee would have the effect of making the Bankruptcy Act take precedence over the federal Winding-up Act in any case where either could be resorted to. This is designed to prevent the use of the Winding-up Act to avoid the effect of the reviewable transactions concept of the Bankruptcy Act, in that this is a method that has been used in the past to circumvent the bankruptcy law. I hope that the committee will give this amendment favourable consideration.


Mr. Churchill:: Where will it fit in?


Erik Nielsen: Mr. Chairman, I suggest that we consider clause 21 as a whole and if any member wishes to make representations in respect of separate sections of Part X which fall within clause 21 he can then do so. Perhaps the minister will tell us which part of clause 21 is to be amended and we could deal with that amendment now.
[DOT] (6:30 p.m.)


Louis-Joseph-Lucien Cardin: No, Mr. Chairman. What is envisaged is renumbering clause 21 before we go into part X. If I may, I should like to ask the Postmaster General to move:
That Bill S-17, an act to amend the Bankruptcy Act, be amended
(a)	by renumbering clauses 21 and 22 of the bill as clauses 22 and 23, respectively; and
(b)	by inserting immediately after clause 20 on page 18 of the bill the following new clause:
"21. The said act is further amended by adding thereto, immediately after section 169 thereof, the following section:
Winding-up Act not to apply.
'169A. (1) Where a petition for a receiving order or an assignment has been filed under this act in respect of a corporation, the Winding-up Act does not extend or apply to that corporation notwithstanding anything contained in that act, and any proceedings that are instituted under the Winding-up Act in respect of that corporation before the petition or assignment is filed under this Act shall abate subject to such disposition of the costs of those proceedings to be made in the bankruptcy proceedings as the justice of the case may require. Saving.
(2) All proceedings instituted under the Winding-up Act before subsection (1) comes into force may be continued under that act as if that subsection had not been enacted.' "


Mr. Cole (Longueuil):: I so move, Mr. Chairman.


Herman Maxwell Batten: Shall the amendment carry.


[Stage Direction]
Amendment agreed to.
[Stage Direction]
June 16, 1966
Bankruptcy Act
On clause 22 as renumbered-Definitions. "Clerk." "Court."
Francis Andrew Brewin: Mr. Chairman, I raised a point earlier when clause 1 was under discussion and the minister replied that it would be looked into. I appreciate that it would have been better had he had time to look into it more fully, but on reflection it seems to me that the point I made is probably well taken. In other words, if we do not make any amendment to this part we will run into the very serious danger of it being held that this is legislation dealing with property and civil rights in part X rather than legislation dealing with bankruptcy and insolvency.
For this reason I propose to move an amendment. If it is not acceptable to the minister, I know he will say so and I will not press the matter to a vote. But unless somebody can give a better explanation than we have had I think it is necessary. I move:
That Bill S-17 be amended so as to add to clause 22-
As it now is.

thereof after the word "debtor" in section 173
(c)	the words "shall mean an insolvent debtor, but"
The effect of that would be to make it clear that this part which refers throughout to debtors making application applies only to insolvent debtors. The word "insolvent" is not defined in the act, but it is a word of well known meaning; it refers to somebody who cannot pay his debts.
I think this would be a worth-while amendment because, quite seriously-I may have overlooked something-if there is no such wording in the act we may rim into difficulty. If in explanation the minister says that this amendment is not necessary, I will not insist on it. I am only moving the amendment to try to be helpful and not in any way to question the wisdom of enacting this part. I am just trying to avoid a possible pitfall.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I think the hon. member's point is well taken and I would certainly have no objection to the amendment with the wording the hon. member has just proposed.


Francis Andrew Brewin: Mr. Chairman, I apologize that the amendment is in my handwriting. I hope hon. members will be able to read it. My handwriting is sometimes not too legible, but the amendment is fairly simple.
[The Chairman.]


Erik Nielsen: Mr. Chairman, if I have the sense of it correctly from the hon. member for Greenwood, the new paragraph (c) of section 173 would read:
"debtor" shall mean an insolvent debtor but does not include a corporation; and


Francis Andrew Brewin: That is right, Mr. Chairman. The hon. member for Yukon has it just as I intended it to be. I do not know whether he was in the chamber when I mentioned earlier that I thought there was a constitutional difficulty here. If it meant "any debtor" there might be difficulty about this part referring to property and civil rights rather than bankruptcy and insolvency legislation.


Herman Maxwell Batten: Order. I think the intention of the amendment moved by the hon. member for Greenwood is clear. While the Chair has no authority to change the words which the hon. member wants to use as an amendment, perhaps the Chair could suggest a different form. Would the hon. member be willing to rephrase his amendment so that the addition is made after the word "debtor" and before the word "does"?


Francis Andrew Brewin: I would be perfectly willing to accept that suggestion, Mr. Chairman. I think it does add a little clarity.


Herman Maxwell Batten: Then the paragraph as it is proposed to amend it would read:
"debtor" shall mean an insolvent debtor but does not include a corporation
Is that the sense the hon. member intended?


Francis Andrew Brewin: Exactly, Mr. Chairman.


Herman Maxwell Batten: It is moved by Mr. Brewin:
That Bill S-17 be amended so as to add to section 22 thereof between the words "debtor" and "does" in 173(c) the words "shall mean an insolvent debtor but"
[DOT] (6:40 p.m.)


Yves Forest: May I ask the member for Greenwood whether he is aware that there is a definition of "insolvent person" in the Bankruptcy Act which defines it as a person who is unable to meet an obligation of at least $1,000? Would that preclude those persons who owe less than that amount from taking advantage of these provisions?


Francis Andrew Brewin: Perhaps I did not explain my point with sufficient clarity. I purposely did not use the words "insolvent person" in order to avoid importing into this part of the bill the definition of those words which appears
June 16, 1966

in Section 2 (j) of the Act. I used the word "insolvent" in its ordinary sense of an insolvent debtor or someone who is unable to pay his debts. I prefer to do that than to import the technical language implied in the words "insolvent person". That was deliberate on my part.


Herman Maxwell Batten: Does the committee agree to the amendment?


Erik Nielsen: I wish to express a reservation. I do not want to hold things up and I see the admirable intention of the member for Greenwood but I wonder whether certain circumstances might not arise into which this amendment might throw a monkey wrench. At present the section appears to me simply to be there to exclude corporations.
However, I can see a situation arising under the Winding-up Act where the word "debtor" as used in these provisions may mean something else than an insolvent debtor. I therefore hesitate to accept the amendment suggested by the hon. member, however laudable his purpose may have been in introducing it, in that I think the Winding-up and Bankruptcy Acts are such complex pieces of legislation that the hon. member's amendment may do more than merely clarify a constitutional situation. The subsection is simply there for the purpose of excluding a corporation. Situations may arise where the provisions of the Winding-up and Bankruptcy Acts may be applicable to debtors who are not insolvent. I would not rule out such a possibility. I wonder whether the hon. member or the minister and his advisers have considered that aspect of the proposed amendment.


Francis Andrew Brewin: I did consider that point, Mr. Chairman. This amendment will only apply to Part X which we are now discussing and which is a little code of its own dealing with the power of the court or the clerk of the court to make a consolidation of orders for debtors. It is a very useful provision, but the point is that if a debtor is not insolvent then it is vital that an attempt be made to regulate his debts and give certain rights which will apply beyond the field of the competence of parliament. It is only if you import the idea of bankruptcy or insolvency that you take the matter out of the realm of property and civil rights and move it into the realm of bankruptcy and insolvency which gives this parliament the right to deal with the matter.
Bankruptcy Act
This amendment does not reflect on the definition of "debtor" anywhere else except in this particular part. I suggest that this amendment is essential; otherwise the whole part might be ultra vires. The reason for doing this by way of an amendment to the definition of the word "debtor" is that throughout the part there is an implication of the application of a debtor. If you define "debtor" in the way in which I propose you ensure that the whole part relates to insolvency.
I think I have considered the matter adequately and I suggest to the hon. member for Yukon that this is not a tidying-up amendment; it is an essential amendment which would bring the matter within the competence of this parliament.


Louis-Joseph-Lucien Cardin: I know that the hon. member is aware of the definition in the Bankruptcy Act whereby "debtor" includes an insolvent person, and he is probably aware of the fact that the definitions included in this act are also applicable to Part X. I have no objection to the amendment which he has suggested and I do not see any difficulty arising through the inclusion of these words. I wonder whether the hon. member for Yukon could cite an example of the kind of difficulty that he suggests might be encountered because of the insertion of this definition.


Erik Nielsen: I think I gave one when I spoke a moment ago. If one excludes corporations one can envisage a situation in which the legislation would be applicable to debtors who might perhaps form a syndicate of three or six members, one or more but not all of whom might be insolvent and might wish to proceed on behalf of that syndicate under the provisions of the Winding-up Act which is dominion legislation.
Most provinces and territories have their own winding-up legislation to which this would not apply because it falls under the exclusive sphere of jurisdiction of the provinces. I cannot give a specific example but I can think of the possibility of some members of a partnership or a syndicate being solvent while others are not and yet winding-up proceedings being taken on their behalf.
The minister may have received advice from his officials and I would certainly be prepared to act on whatever recommendation they may have given him. If they can see no possible problem in the acceptance of the amendment, then I will certainly not argue with them.

June 16, 1966
Bankruptcy Act


Mr, Cardin:: The opinion of my officials is that this amendment would not cause any foreseeable problem.


[Stage Direction]
Amendment agreed to.
Herman Maxwell Batten: Does this complete the discussion of section 173 which is part of the renumbered clause 22?


Erik Nielsen: I would suggest that to save time, if it meets with the agreement of the committee, we take the whole clause instead of taking it section by section.
There is only one more observation I wish to make and it has to do with the new section 198 which reads:
This Part shall come into force in any province only upon the issue at the request of the Lieutenant Governor in Council of that province, of a proclamation of a Governor in Council declaring it to be in force in that province.
I am again thinking of the situation which exists in the Yukon and the Northwest Territories which do not have a lieutenant governor. I know that according to the Interpretation Act a province includes a territory but I am not certain that the expression "lieutenant governor" includes commissioner, so I think some clarification may be necessary here. I suggest that perhaps a solution would be to amend section 198 to this effect: At the request of the Lieutenant Governor in Council of that province or of the commissioner of the Yukon or Northwest Territories. The legislation is equally applicable in the north; yet the north is excluded by the use of the words "Lieutenant Governor in Council". [DOT] (6:50 p.m.)


Horace Andrew (Bud) Olson: I should like too ask the minister if there is a precedent for the way section 198 reads. Its effect is that legislation passed by the federal parliament does not come into effect in any province unless there is a proclamation by the Lieutenant Governor in Council. Is there any problem here in connection with having a province proclaim federal legislation?


Louis-Joseph-Lucien Cardin: If I understand correctly, the real purpose of this whole section is to validate legislation which was passed by Manitoba and Alberta and subsequently declared ultra vires. At the request of these two provinces the federal government is enacting this legislation. I believe the matter came up a couple of years ago and has been in the Senate since that time. I presume that the procedure written into this legislation might have been put there by reason of these facts.


Horace Andrew (Bud) Olson: I appreciate the minister's remarks, Mr. Chairman, concerning the reasons why Part X was written into the bill. However, I come back to the question I asked him. Is there any precedent for the Lieutenant Governor in Council proclaiming federal legislation. The provisions of this part will not ordinarily come into force at all unless there is such a proclamation by the Lieutenant Governor in Council. The question is really very simple. Is there any precedent under which the Lieutenant Governor in Council has proclaimed federal legislation? I am curious about this.


Louis-Joseph-Lucien Cardin: To be perfectly frank, I do not know but I can find out.


Mr. Schreyer:: Far be it for me to offer advice to the senior members here, but I believe the hon. member for Medicine Hat should read the clause carefully. If he does he will find that what is being proposed here is not a proclamation of federal legislation by the province but rather a request from the province that the Governor in Council proclaim the legislation. I believe there is a difference which removes the problem.


Stanley Howard Knowles: Mr. Chairman, I wonder if the minister could indicate whether part X as a whole is substantially in line with what the provinces of Alberta and Manitoba have requested?


Louis-Joseph-Lucien Cardin: Yes, Mr. Chairman, I understand it is very much in line; there have been few changes, if any.


Stanley Howard Knowles: Will the minister comment on the provisions of what will be the new secton 174 of the act in which there is a $1,000 limit? Is that the limit that the provinces had in their legislation? What is the reason for having a limit at that point?


Louis-Joseph-Lucien Cardin: I understand, Mr. Chairman, that these provisions in this part were substantially those that had been legislated in both of these provinces. I presume that anything as important as this would be exactly the same as that which has been legislated by the provinces.


Stanley Howard Knowles: May I ask one other question with regard to the $1,000 ceiling? Is it a ceiling on any one, individual debt of a debtor or is it an over-all ceiling on a combination of debts?


Louis-Joseph-Lucien Cardin: Would the hon. member mind repeating his question?
June 16, 1966


Stanley Howard Knowles: I was asking the minister whether the $1,000 ceiling is a ceiling on each individual debt or is it a ceiling on a combination of debts? In other words, if a debtor has three or four debts which he wishes to bring under this orderly payment of debts arrangement and each of those debts is below $1,000 but their total is in excess of $1,000, could he get in under this legislation?


Louis-Joseph-Lucien Cardin: I will have to obtain information from my advisers on this question. It should be available in a matter of a few minutes.


Erik Nielsen: In the meantime, while we are waiting for that advice, I might be permitted to lay the ground-work for an amendment I feel I must propose. Under the provisions of the Yukon and Northwest Territories Acts property and civil rights are passed to the commissioner in council in the same way as they are in the provinces. We have companies legislation passed by our legislative body in the Yukon and we have winding up legislation, and have had for many years. There is no cure to be found in the fact that the Interpretation Act defines the word "province" to include the Yukon and Northwest Territories since the new section 198 uses the expression "Lieutenant Governor in Council of that province".
It becomes necessary, therefore, to allow a
similar request to be made by the commissioner in council of either the Yukon or the Northwest Territories for this part to become effective in these jurisdictions. Therefore I suggest this amendment:
That clause 198 be amended by adding the following words immediately after the word "province" in line 25 on page 29, "commissioner in council of the Yukon Territory or Northwest Territories".


Louis-Joseph-Lucien Cardin: I think I would agree with this amendment, Mr. Chairman. As the hon. member knows, there will be a revision of the act and if this amendment is found to be redundant or for some reason the section is now applicable to the Yukon and Northwest Territories, it can be worked out at that time.


Erik Nielsen: Perhaps the minister will recall that we had the same problem with regard to the applicability of the student loans legislation when that bill came before the house.


Horace Andrew (Bud) Olson: I have no objection to the amendment proposed by the hon. member for Yukon. If I may deal with the section for a moment, I should like to thank the hon.
Bankruptcy Act
member for Springfield for his comments. If you read the section leaving out the portion between the two commas, you will find it reads as follows:
This part shall come into force in any province only upon the issue ... of a proclamation by the Governor in Council declaring it to be in force in that province.
[DOT] (7:00 p.m.)
It is clear that the governor in council of Canada will in fact proclaim this legislation. But between the two commas it says that it shall come into force only "at the request of the lieutenant governor in council of that province". Therefore, Mr. Chairman, that must mean that this legislation can never be effective as long as that wording is contained in section 198 of the act, or in the act at all. It can never be effective in any province until and unless such request comes from the lieutenant governor in council of that province; and if the amendment proposed by the hon. member for Yukon is accepted, until and unless such request comes from the commissioner in council for the Yukon and Northwest Territories.
I am still curious to know whether or not there is a precedent for any legislation passed by this house not being proclaimed until and unless a request comes forth from the lieutenant governor in council of a province, or the respective authority in the territories. Because as long as this wording between the two commas is in that section, this part of the act cannot be operative or effective in a given province. It is written into the statutes that it is effective only at the request of the lieutenant governor in council of the province.
If no legal problem is involved here I am satisfied. If there is one perhaps someone can move an amendment. But supposing a province, or several provinces, made the request that this act be proclaimed in a province, then of course all the provisions of this part of the act, and perhaps the operative provisions of the whole act, will be excluded from operation in that province.


Louis-Joseph-Lucien Cardin: Mr. Chairman, I explained a while ago that this section was based on legislation which had been passed in Alberta and Manitoba; and at the request of both these provinces we wanted to make this legislation effective and legal. It is possible that other provinces do not have similar legislation. If other provinces want this type of legislation, then at the request of the lieutenant governors of those provinces the legislation would become effective. I think

June 16, 1966
Bankruptcy Act
this might be considered permissive legislation, at least in regard to these two provinces. If other provinces want a similar type of legislation, it could become valid by this proclamation.


Stanley Howard Knowles: Mr. Chairman, I am sure that the opportunity to do a little research would turn up some examples that would answer the question put by the hon. member for Medicine Hat. A couple have occurred to me. They are not exactly the same but they are very close to this provision. The Canada Pension Plan is one. If a province does not want the plan to apply to that province, it does not. Is that not virtually the same?
Our divorce legislation, I think, is in that category. We have federal divorce legislation, but there are still a couple of provinces in Canada in which at their request, that legislation does not apply; and there was a time when there were more.
I think there are probably a number of examples like that where the federal government, at the request of the provinces, provides for legislation of a particular kind to be in effect, but it is not in effect in others.


Louis-Joseph-Lucien Cardin: I thank the hon. member for Winnipeg North Centre, and at the same time, if I may, I should like to answer the question which he asked a while ago. The ceiling to which he referred is on one debt and not on a combination of debts.


Stanley Howard Knowles: So that it would be possible for a person to have several debts; and provided that no one of them was greater than $1,000 he could bring them all within the terms of this legislation?


Louis-Joseph-Lucien Cardin: Yes. If I might just allude to the amendment to which the hon. member for Yukon referred, I have received word from my advisers. It is felt that we would have to look at this a little more carefully, because apparently it would affect more than one section of the act. I understand that section 196 and section 173 are affected.


Erik Nielsen: Mr. Chairman, these sections are unaffected. Section 196 gives the governor in council power to make certain regulations, among which is the power to prescribe the court for the purpose of this part of the act. The lieutenant governor in council has that power in any event. Nothing in section 198 will affect section 196. With respect to section 173, the expressions "lieutenant governor in council" and "court" are not affected by the amendment which I have proposed.

I think that perhaps the officials of the minister have missed the point of the amendment. I am satisfied that the Interpretation Act provides that territories are included wherever the word "province" is used. But I do not believe that the Interpretation Act says that wherever the phrase "lieutenant governor in council" is used it shall include the words "commissioner in council". Unless it does say that-and I do not think it does-then this part cannot possibly come into force, even if the commissioner in council of the Yukon wanted it to come into force.
May I suggest to the minister that the winding-up ordinance which conferred exclusive jurisdiction to the legislative council of the Yukon could be used just as abusively there as anywhere else in the country. There is a need for this kind of legislation in respect to the consolidation of debts; instances have arisen where this legislation could be usefully implemented.
I suggest that the amendment does not affect secton 196 or any other section, and I have looked at them very carefully. The only section it will affect is any section wherein the phrase "lieutenant governor in council" appears, and I believe it appears only in section 198.


Louis-Joseph-Lucien Cardin: Mr. Chairman, if I may just
answer the question of the hon. member: Part X of the act is required because the provincial governments have no power to regulate debts. This was proven by the fact that we had to legislate to make effective the legislation in Manitoba and Alberta. However, this problem does not arise in the Yukon territory or in the Northwest Territories, because they do not have the power of a province under section 92A of the British North America Act. So actually we are controlling the situation ourselves and it is unnecessary to specify the territories.
[DOT] (7:10 p.m.)


Erik Nielsen: Mr. Chairman, for the purpose
of helping the minister along with the bill, and getting it through, I am going to withdraw my amendment, with the permission of the members of the committee, because I feel there is some doubt about it. But let me say to the minister that the nature of his advice is faulty. The Yukon and the Northwest Territories are given, in the same way the provinces are given by respective federal acts, property and civil rights. The northern territories have full power to pass any legislation in this kind of matter, as have the
June 16, 1966	COMMONS
provinces. If there is a vacuum which exists with regard to the regulation of debts and the jurisdiction of provincial legislatures, it exists similarly in the Yukon.
I would suggest to the minister that the committee might take a hard look at the application provisions when they come up for final amendment. In the meantime I do not think there will be any great outbreak of need for this kind of legislation in either of these two northern territories.
Clause as renumbered agreed to.
Clause 23 as renumbered agreed to.


[Stage Direction]
Preamble agreed to.
Title agreed to.
Louis-Joseph-Lucien Cardin: I should like sincerely to thank
the committee for what I consider to have been a very useful and constructive afternoon's work. Hon. member's can rest assured that what they said fell on receptive ears, since members of the revision committee were listening to the proceedings.
Bill reported.


Mr. Deputy Speaker:: When shall the bill be
read a third time?


Erik Nielsen: I know this is very unusual,
and bills are not usually given third reading on the same day amendments are made. Nevertheless by virtue of the nature of the legislation, could we not have it read the
third time, now?


Gordon Minto Churchill: The only comment I would
have is that this is unusual and probably unsound practice. A bill has to be reprinted when amendments occur in it. If third reading is given now, what is the next step? Will it be dealt with immediately? Will it be dealt with at a quarter to ten, for example?


Mr. Deputy Speaker:: Order, please. The Chair is of the opinion that the question
asked by the hon. member for Winnipeg South Centre is not one that the Chair ought to answer. Other proceedings should be carried out here. How those proceedings will be dealt with is a matter for the government and the other place to decide.


Gordon Minto Churchill: I was directing my question, not to the Chair but to the government side. I recognize this as urgent and important legislation. Unless the bill is going to be completed by a reference back to the other place-because we have amended it-to be dealt with tonight at a quarter to ten, we should not
DEBATES	6517
Company of Young Canadians break the long standing custom of postponing third reading until the amended bill has been reprinted and presented to the house.


Louis-Joseph-Lucien Cardin: Mr. Speaker, although we are all anxious to get the bill through, I doubt if it is physically possible to have the amended bill printed by ten o'clock.


Gordon Minto Churchill: Then it should not get third reading.


Mr. Deputy Speaker:: When shall the said bill be read a third time? At the next sitting of the house?


Some hon. Members:: Agreed.


Mr. Leboe:: On a point of order, Mr. Speaker. Since we have made very good progress while in committee, and since some of us have not eaten, I wonder whether the house might not wish to recess until eight o'clock.


Mr. Stewart:: We gave up the private members hour today, and I should think, that being so, private members would expect us to continue. We have a heavy program of work to complete before ten o'clock, of which hon. members no doubt are well aware.


Stanley Howard Knowles: I think the argument is the other way. The government has been given the extra hour, and it should return the compliment.


Gordon Minto Churchill: It is exchanging 40 minutes for one hour. I think those who would like to recess ought to be accommodated.


Mr. Deputy Speaker:: Is it the wish of the house to recess now until eight o'clock?


Some hon. Members:: Agreed.
At 7.19 p.m. the sitting was suspended.



SITTING RESUMED

[Stage Direction]
The house resumed at 8 p.m.


[Stage Direction]
The house resumed, from Friday, June 10, consideration in committee of Bill No. C-174, to provide for the establishment of The Company of Young Canadians-Mr. Pearson-Mr. Rinfret in the chair.
Herman Maxwell Batten: When the committee was last dealing with this bill it had reached clause 10.
June 16. 1966

Company of Young Canadians
On clause 10-Executive Director.


Mr. MacDonald (Prince):: Mr. Chairman, I rise to speak again on this clause because I think that here is a clear indication of some of the difficulties incurred in the drafting of this bill, and of the difficulties which will be faced in the operating of The Company of Young Canadians.
As I stated on Friday afternoon of last week, clause 10 contains a conflict in philosophy that is somewhat crucial. I am not sure whether all hon. members have yet realized what a unique and novel bill this is. In effect it is going to provide for a highly independent corporation. Although I am not an experienced parliamentarian, I know of no other bill setting up a corporation in which two thirds of the members of its board of directors are to be appointed, not by the governor in council but in this instance by the volunteers and members of the agency itself. This is the genius of the program, that we are giving a tremendous amount of autonomy to The Company of Young Canadians.
I have been assured by youth leaders and workers that without this autonomy the program could not receive the wholehearted support of youth. I am only too well aware of the dangers inherent in youth organizations which are overtly controlled by other outside and perhaps more senior bodies, and it is on that ground I disagree with the conflict in philosophy contained in clause 10. We are trying to say something clearly but it does not come through. It has to be said clearly in this clause, as indeed throughout the whole bill, that the board will have a high degree of autonomy and that the executive director, who will be the most important person in this program, will be ultimately responsible to the board of directors of The Company of Young Canadians. Unless we say that clearly we put the whole program in great jeopardy. If we do not say it, then we asserting that we are not anxious to give these young people the trust they both want and need in order to formulate this highly exciting program. Therefore I sincerely ask the government to consider adding the words "and with the concurrence of the council" after the words "during pleasure" in subclause (1). This will give assurance with respect to the authority to whom the executive director will be responsible, and will leave no doubt in the minds of the board of directors.
[The Chairman.]


Edward Richard Schreyer: Mr. Chairman, I support the contention that there is an ambiguity in the clause. If it is the intention of the drafters of the legislation that the executive director shall be appointed on the recommendation of the council of The Company of Young Canadians, then it should be followed through logically, and the authority for replacement should rest with the council of the company. As the clause stands, it would seem that this is something left to the discretion of the governor in council.
As has been said by previous speakers, and most notably by the hon. member for Prince, if youth is to participate in this program to the full extent that we all hope they will, it must be made abundantly clear in the legislation that the organization and direction of the program is left with them so far as possible, in fact to the ultimate degree possible. This ambiguity could be dealt with easily by incorporating the proposed amendment suggested by the previous speaker.


Reid Scott: I think a very reasonable and sensible suggestion has been made, and we would be interested in hearing the comments of the parliamentary secretary to the Prime Minister on it.


Mr. Matheson:: Mr. Chairman, the point that has been raised by the hon. member for Prince was clearly recorded at page 6283 of Hansard for June 10. Since that time there has been an opportunity to consult with the officers who drafted this legislation, and also with the Department of Justice. It is clear that the governor in council may, on the recommendation of the council, appoint. The appointment depends upon the recommendation of the council. The advice of the Department of Justice is very clear, that by the same token the executive director may lose his employment on the action of the governor in council upon the recommendation of the council. In other words, the council of The Company of Young Canadians can recommend to the governor in council that the executive director be fired.


David Samuel Horne MacDonald: Where is that stated in the clause?


John Ross Matheson: This is indicated in the opinion of the Department of Justice.


David Samuel Horne MacDonald: It does not say this in the clause.


John Ross Matheson: The hon. member for Prince is pressing that something further be written
June 16, 1966	COMMONS DEBATES	6519
into the bill. The entire burden of the legislation is to indicate the great confidence that the government enjoys in the capacity and skill of this new federal corporation with respect to its own self-government, and I am amazed at the query being raised with respect to any doubt on this point.
It is clear that the requirement of the recommendation of the council with respect to the executive director's employment will, in the first instance, prevent the appointment of an executive director for some unworthy reason, for example a political reason. It is clear that The Company of Young Canadians will itself have control of its own destinies to the extent that the appointment of two thirds of its directors rests in the hands of its volunteer members; but on the part of the government there rests a continuing responsibility to see that a federal corporation, which has mighty things ahead of it to accomplish, shall continue in existence.
[DOT] (8:10 p.m.)
Of course in the normal process there will be a continuing change of members of the council. I do not see anything very troublesome about the addition of the words "and with the concurrence of the council". The question which immediately comes to my mind, however, is why are they necessary; what is the real motive in questioning the integrity of the governor in council. Surely what we are trying to do is to create a company which will develop from the beginning its power not only to control and govern itself but to formulate and develop policy. As we go into other sections it will be clear that everything has not been established with respect to the future. I certainly would appreciate hearing from other members on this.


Herbert Wilfred Herridge: Mr. Chairman, I should like to support the suggestion made by the hon. member for Prince. It is all right for the Acting Prime Minister to say that the opinion of the justice department is this or that, or that this or that can be taken for granted. Anyone who has been here for a number of years knows that expressions of opinion in this house in respect of an interpretation have no effect; it is what is written in the law. I think the hon. member for Prince has a good point. He wishes to be certain what procedure will be followed. If someone is appointed as an executive director and finds there is some conflict with the council, I think it is a very reasonable suggestion that we should make certain of the continuity of
Company of Young Canadians the administration by including the words recommended by the hon. member.
I see that I am going to be opposed by another member of the legal profession, and that always puts me a bit off my base. I cannot see why there should be any objection. The Acting Prime Minister a few minutes ago said in effect that this was the opinion of the law officers of the crown, so why the objections?


John Napier Turner: Mr. Chairman, on behalf of my colleague I should like to say that I am sure he must feel flattered by the well deserved promotion he has received this evening from the hon. member for Kootenay West.
We were advised by the law officers of the crown that the right to appoint on the recommendation of council, taken with the words "during pleasure", implied the right to dismiss. That was the opinion we received. It is also in accordance with past practice in the drafting of statutes. If hon. members of the committee would prefer to see it spelled out as suggested by the hon. member for Prince, I do not think we would have any objection. I suggest that perhaps the hon. member should reduce his suggestion to writing.


Maurice Rinfret: It is moved by the hon. member for Prince that clause 10(1) be amended by inserting, after the words "during pleasure", the words "and with the concurrence of the council". The clause as amended would then read:
The governor in council may, on the recommendation of the council, appoint an executive director of the company who shall hold office during pleasure and with the concurrence of the council and shall be paid by the company such salary as shall be fixed by the governor in council.
Shall the amendment carry?


Gordon Minto Churchill: Mr. Chairman, I have heard the remarks which have been made and I understand the interest in this problem. I have also heard the interpretation that has been given by members on the government side. May I ask those who are sponsoring this bill who will be responsible directly to the House of Commons when the house discusses the estimates for The Company of Young Canadians, and in the course of time discusses the activities of The Company of Young Canadians. What minister of the crown will have to answer to the house for the activities of this organization? Would this minister not be placed in a very difficult and awkward position if he had to report to the
June 16, 1966

Company of Young Canadians house that he had no control of any sort over the executive director? I have not had time to consider this fully, but I raise this as a subject for discussion.
Responsibility has to lie with the government. If the minister of the crown who reports to parliament concerning this organization is caught in an awkward position, where something has gone wrong with the organization, are the hands of the government tied so that if the executive director is responsible for something which does not meet with general approval he may not be released or separated from employment? After all, this is an organization which is being supported by public funds. The funds provided for this organization have to be approved by the government and submitted to parliament for the approval of parliament. Parliament then, of course, asks for a report concerning how the funds have been used. The government bears the responsibility.
I suggest to the members of the government that they should give very careful consideration to this particular problem. I think the arguments presented and the motive behind the amendment are all right. I can understand the suggestions which are being put forward; but I am wondering whether sufficent consideration has been given to the responsibility of the government in this regard. We hope the organization will have success; we hope that the executive director, and successive executive directors, will perform their duties adequately. I think, however, we must be a little careful here in passing legislation, and the government should not tie its hands unless it is absolutely certain it is on firm ground.
[DOT] (8:20 p.m.)


Herbert Wilfred Herridge: Mr. Chairman, I have just a few words, in view of the post mortem analysis of the situation by the hon. member for Winnipeg South Centre after the amendment had been carried-


Gordon Minto Churchill: It had not been carried.


Herbert Wilfred Herridge: Pardon me. Now I can understand the reason for the remarks the hon. gentleman made. As the senior member on the front benches on the opposite side in terms of service, but not in terms of the amount of salary received, on behalf of the opposition I want to compliment the Minister without Portfolio for his co-operative spirit and approach to the development of this legislation.


Mr. Pugh:: Mr. Chairman, I should like the parliamentary secretary to explain the precise meaning of the words "during pleasure" in clause 10. I rise to ask this question now because of the point referred to by the hon. member for Winnipeg South Centre. The phrase "with pleasure" as I understand it means at the beck and call of the council, and the added words "and with the concurrence of the council" do not add very much. Will the parliamentary secretary explain precisely what those words mean, particularly in view of the explanation sought by the hon. member for Winnipeg South Centre.


John Ross Matheson: Mr. Chairman, let me answer my friend by saying that the duties of the chief executive officer are spelled out in subclause (2). I think that answers his query in respect of the meaning of "during pleasure". Of course this language is familiar to legislatures and courts. The executive director is the chief executive officer of the company and he is under the direction of the council. He is responsible for the management and supervision of the work and staff of the company.
The expression "during pleasure" would mean that the executive director would run the show under the direction of the council, and provided he was not behaving improperly or in such an unseemly way as to require extraordinary action, he would continue to do so. He is to run this company under the direction of the council. The council recommends him for his job and, as I have indicated, in the opinion of the law officers of he Department of Justice, by the same token that council can recommend his dismissal if they do not like the way he is performing his job.


David Vaughan Pugh: The answer given by the parliamentary secretary is exactly the meaning I read into the words. I am in complete concurrence with the opinion of the law officers who have said in effect that "with pleasure" means precisely "during pleasure and with the concurrence of the council". The council in other words decides whether or not he is to continue in his position. If they decide to keep him on, they do so; but if they decide otherwise, they fire him.


[Stage Direction]
Amendment agreed to.
Clause 10 as amended agreed to.
June 16, 1966	COMMONS
On clause 11-Executive committee.
Edward Richard Schreyer: In reference to clause 11 (3)
I believe that in order to be consistent there should be an amendment here as well. Reference is made to the fact that the executive director may attend the meetings of the council and the executive committee. This is a rather strange and unnecessary provision, if the executive director is to work under the direction of the council, as we are informed. The decision as to whether or not and how frequently the executive director shall attend meetings should remain at the discretion of the council. Surely there is no necessity for this statutory inclusion in the bill. The more one thinks about this, the more likely he will conclude that there is a motive on the part of the government to make sure that the executive director will be able to act in the capacity of a chaperone whenever he sees fit. Either we trust The Company of Young Canadians and their executive and executive committee, or we do not. If we trust them, it seems to me this statutory provision is unnecessary and uncalled for.


John Napier Turner: Mr. Chairman, may I say in
answer to the hon. member that it is quite clear from the legislation that the executive director is appointed on the recommendation of the council. He is subject to their management and direction. If he is to do a good job and have liaison with the council he must be given the ex officio right to attend meetings of the council and the executive committee. Otherwise he just could not run a good show. I do not think this subclause implies any element of governmental control. The executive director is an independently appointed creature of the company, and if he is going to do a good job he must have liaison with the council in order to keep them informed and be himself informed.


Edward Richard Schreyer: That is not the normal relationship which exists in a corporation. The executive director is usually hired and works under the direction of the executive officers or the board of governors. The same kind of relationship exists, for example, in a school district. The principal of a school or an employee of the board is invited to attend meetings of the board, and unless such an invitation is forthcoming the principal or employee is not expected to attend.
I should like the minister to explain at least this one point. Is the executive director working under the direction of the council or
DEBATES	6521
Company of Young Canadians is he not? If he is, then I suggest this provision is redundant.


John Napier Turner: Mr. Chairman, clause 10 (2) makes it clear that the executive director is the chief executive officer. The same subclause indicates that he is responsible for the management and supervision of the company under the direction of the council. He is the chief executive officer; he is not a hired employee of the council. If he is to do his job as managing director and chief executive officer he must have the necessary liaison with members of the council, and I submit to the committee that he should have an ex officio right to attend the meetings of the council and the executive committee. Otherwise any liaison that he may have would completely break down.


[Stage Direction]
Clause agreed to.
Clause 12 agreed to.
On clause 13-Head office.
Gordon Harvey Aiken: Mr. Chairman, I should like to ask why the location of the head office of the company is not spelled out in the bill, which would seem to be the normal arrangement. May we have some explanation in this regard as to the intention of the government?


John Napier Turner: Mr. Chairman, I cannot suggest any definite reason, except that as yet the head office has not been chosen. It is not unusual in corporate creatures not to declare the location of the head office in the charter. They are often allowed to declare this afterwards by proclamation.


Richard Albert Bell: Mr. Chairman, would the minister indicate a precedent equivalent to this? Surely the place for the head office of national public corporation or company is in the national capital and not elsewhere. Will the minister give us some indication in this regard?


John Napier Turner: I assume that the location of this company will be in the national capital, Mr. Chairman.


Richard Albert Bell: Mr. Chairman, I am not prepared to allow this clause to pass on the basis of an assumption. Surely we can have some commitment from the minister in this regard; otherwise we should allow the clause to stand.


Mr. Macquarrie:: Mr. Chairman, speaking as a member who fives many miles from Ottawa, I should like to say that I concur
June 16. 1966

Company of Young Canadians completely in the remarks of the hon. member for Carleton. One aspect of this bill that surprised me from the beginning was that any consideration would be given to having the head office elsewhere than in the national capital, and I too should like to hear more on this subject.
[DOT] (8:30 p.m.)


John Napier Turner: Mr. Chairman, I would certainly be prepared to give the commitment as long as the hon. member for Carleton does not ask us to specify the county.


Richard Albert Bell: Mr. Chairman, I must ask the minister to let this clause stand unless he is prepared to say what the commitment is.


John Napier Turner: The commitment is that the head office of the company will be in the national capital; but I have not specified the county.


Richard Albert Bell: I only hope that there will not be this sloppy draftsmanship in future legislation.


John Ross Matheson: Mr. Chairman, I should like to add this comment. When this clause was drafted it was felt that there should be a certain degree of flexibility. In a sense the argument of the hon. member for Carleton is running counter to that of some of his colleagues who have been arguing that there should be within this corporation a large freedom to govern its own destinies. While I do not think there was ever any thought on the part of anyone that the head office would be elsewhere than in the national capital, it seems extraordinary that the hon. member would insist that this be spelled out in the legislation.


Richard Albert Bell: Mr. Chairman, is the hon. gentleman now attempting to go against the commitment that has been made by the Minister without Portfolio?


John Ross Matheson: Of course not.


Richard Albert Bell: Because if that is so, the clause is going to stand.


Eric Alfred Winkler: Mr. Chairman, may I ask the parliamentary secretary whether he thinks there is any other area of Canada in which there would be more freedom for the headquarters of the corporation?


Gordon Minto Churchill: Mr. Chairman, I am prepared to speak on behalf of another location in Canada, if you want to hear from members
{Mr. Macquarrie.]
in regard to what parts of Canada might be suitable for the head office of this Company.


Maurice Rinfret: Shall clause 13 carry?


[Stage Direction]
Clause agreed to.
Clause 14 agreed to.
On clause 15-Powers.
David Samuel Horne MacDonald: On clause 15, Mr. Chairman, the parliamentary secretary to the Prime Minister has said that some parts of this bill have been left free. I agree with him in that sense, but I do not think they should ever be left vague. In clause 15 we have almost the reverse procedure; we have worked overlong in spelling out in some detail the kinds of things The Company of Young Canadians are going to do. In fact we have spelled this out in great detail. The bill refers to such things as assisting young people who are economically or socially handicapped to obtain greater benefits from their schooling and to reduce the number of young people who leave school before completing their schooling; undertaking recreation programs for young people where these programs are not available; undertaking programs in public health; engaging in the teaching of home economics, and so on.
One of the things that bothers me about this program, as has often bothered me in the past about other government programs, is that people far removed from the scene of local activity have conceived in their wisdom (1) what the problem is and (2) what the solution must be. I think that if The Company of Young Canadians is to succeed it will succeed because it is, first of all, not filled with any great sense of being able to determine well in advance of facing the situation what the problems are and how the solutions may be arrived at. This will be a program that is conceived, in fact, in humility, in which people work together to establish, first of all, what the problems may really be, and second to arrive at the solutions.
While I am not really asking or requiring the government to re-write this long clause, I do want to have it stated on the record that we are not going to enter into this program with any preconceived notions of what in fact the company may do. We must leave both the directors and the volunteers in the field with sufficient freedom that they may realistically face the real problems as they meet them, and not go into these fields with all the answers nicely prepared and ready to put into effect.
June 16, 1966

I would say there has been, again, some confusion of intent and purpose in attempting to set out the powers of the company in this bill. I would simply put these comments on the record so that when the program moves into high gear the company and we who support it may realize that they must be left free to deal with realistic situations in a realistic way.


John Ross Matheson: Mr. Chairman, clause 15
indicates some but not all of the areas in which the company might undertake projects. Paragraph (j) reads:
Generally do at home or abroad all such things as are incidental or ancillary to any of the powers of the company or that would tend to further the objects of the company.
This clause permits the company to consider any type of project which would further its objects. Hon. members will note that paragraph (b) refers to school drop-outs, and paragraph (c) refers to culturally deprived children. In the introduction of this clause it is mentioned that the company may undertake these projects, and it says:
In furtherance of its objects, the company may, in consultation where required or advisable with federal, provincial or other interested governmental authorities or agencies
-do those things which are set out in the succeeding paragraphs.


Mr. Johnston:: Mr. Chairman, speaking to this rather long clause, I would be inclined to disagree somewhat with the hon. member for Prince in that if The Company of Young Canadians is to succeed at all I think it is lather important that it have an idea of some of the directions it will be taking. I believe that this house and the country generally would want to know some of the directions in which the company would be working, in order to have some idea of where public funds were going.
There are advantages to freedom, but there are also disadvantages to total freedom if you want a certain amount of action, because if the choice becomes too wide, then it is very often not made at all. One thing that is not spelled out here-and I do not know how it could be spelled out but I would urge the company to keep it very much in mind,-is development for a certain amount of continuity and a reasonably long range to the program, because what The Company of Young Canadians will be doing is one of the most difficult tasks that any group of people can have, that is, to go into a community and
Company of Young Canadians change it. There is nothing that will arouse opposition more rapidly than change.
I think we have had some evidence of the problems involved, even in this past summer in connection with students working, I believe in Saskatchewan, where problems arose. In spite of all the kind words that have been said about youth, you cannot work only with the youth in a community because what is done there will affect adults and even the aged. Once you touch a community you have to touch it in all its parts. I think the last thing we want The Company of Young Canadians to do is rush in with total freedom and total enthusiasm and become discouraged, because opposition will develop within a community even against the most favourable changes, and very often it will take determination and a firm sense of direction if the program is to be successful.
[DOT] (8:40 p.m.)
I know the clause states:
Engage in community development work in urban and rural areas in Canada
But this is going to be extremely frustrating for these people. I hope that any project that is begun will be carried on over quite a long range of time, until it has an opportunity to overcome the opposition that is bound to rise, no matter how good the spirit in which The Company of Young Canadians enters into that community.
I therefore think it is not so unwise that some of the specific areas are spelled out, such as in clause (e) where it is said:
Undertake recreation programs for young people where recreation programs are not available.
I think the hon. member for Prince, as well as any other hon. member in this house, knows that very often, even in a settled community, recreation programs will be organized when others are already available, and that the success of one often means the failure of another-and that perhaps the original one that had been established might have been the best one in the situation.
So I think it is rather a good idea to have both a warning and a spelling out of the sort of activity in which The Company of Young Canadians could be expected to engage.
[Translation1


Jean-Pierre Goyer: Mr. Chairman, the three positive aspects of this legislation are precisely the freedom, independence and field of work of The Company of Young Canadians. It is obvious from the way the members will be
June 16, 1966

Company of Young Canadians appointed that the company is completely free from all political interference. It is obvious also from the way the company operates that it will not have to take directives from the government, but on the contrary will get its directives from the population, thus calling on the active aspect of the population and putting to work the various associations which could advise it and direct it in its work. And its independence is insured by the scope of its powers which are set forth in clause 15. There is no better guarantee of that than the stand taken by the Prime Minister, (Mr. Pearson), who stated when introducing that legislation:
1English1
We hope as well that this will encourage the company to be experimental as well as responsible in its approach to problems and that the company staff council and volunteers will not be afraid to move into new and creative areas of social actions.
[Translation1
That is proof, Mr. Chairman, that the Prime Minister not only wants the company to make various experiments in the social field which it is considering but also to be able to create new activities still unknown in Canada because until now too much emphasis has been put on basing our social action on what the government would do for the community and we neglected to ask ourselves: What can the community do for its country?
By creating The Company of Young Canadians, we are today giving the young the opportunity not only to join an army of war, as we have done until now, but also an army of peace.
We are therefore giving the young the opportunity not only to practise the art of killing people but also the art of helping people to live. That is how we will progress in Canada and have legislation which will make it possible for us from now on to prevent wars that kill. We must go to the root of the problem and it is found in clause
of Young Canadians whose purpose is to group all Canadians wishing to serve their country. Everything will be possible to help the needy.
From now on, with the Company of Young Canadians, serving one's country can be done not only by going to war for it, but also by fighting poverty at home. Achieving glory will no longer be only a matter of medals, but also one of obscure glory, which is as deserving as that found on the battlefield. From now on we will have our heroes, heroes toiling on our native soil in the fight against poverty.
1English1


Heath Nelson Macquarrie: I wish to say just a word on clause 15, although I am not as worried about it as some other hon. members appear to be. It has a catch-all clause in subclause (j). I suppose some hon. members would disagree with me in my assessment of some of the wording which appears in the subclauses preceding subclause (j), but there is only one about which I am concerned a little bit and that is subclause (i), which reads as follows:
Organize and carry out programs to assist the peoples of other countries to raise their standards of living or otherwise to promote understanding and sympathy between the peoples of those countries and of Canada;
I think, Mr. Chairman, that the expression "or otherwise" debases the idealism and the goals on which the company is launched. I think the phrase would be somewhat improved by the substitution of the word "and". I do not like the idea that this is some device whereby we set up a dubious mechanism. We do not use a dollar diplomacy, because that is a U.S. preserve, but in some organized way we seek to win for ourselves some diplomatic victories and I do not think that is quite worth while, and what is more I do not think it is worthy. To that extent I quarrel somewhat with the decision that we should lift the curtain a little bit and show motives, which
15.
And the general terms should reassure hon. members since paragraph (j) reads as follows:
Generally do at home or abroad all such things as are incidental or ancillary to any of the powers of the company or that would tend to further the objects of the company.
And in the objects of the company, we read of programs for social economic and community development in Canada.
This means, therefore, that all the creative spirit in the young, and the less young, will be gathered within the ranks of The Company
could be regarded as somewhat ulterior. I am therefore concerned a bit.
I do not wish to speak about this bill any more, although in general I feel enthusiastic about it. When we have a launching ceremony down in the maritimes it is almost an impropriety for people to raise doubts; you are supposed to be in the best of good spirits and with the highest hopes, so I am almost apologetic in pointing out what to me is something of a barnacle. This expression causes me concern and I rather wish it had not been put there.
June 16, 1966
[DOT] (8:50 p.m.)


Mr. Allard:: Mr. Chairman, while the house was discussing clause 1 of this bill, I had no opportunity to take the floor, but I think my remarks can be related to clause 15 of this bill providing for the establishment of The Company of Young Canadians.
Mr. Chairman, I wish to remind you that when the question of such a bill was raised, the government of the province of Quebec showed little enthusiasm for this federal project, because there might be some undue interference by Ottawa in matters of exclusive provincial jurisdiction.
Well, if one reads clause 15, one can at last see which aims the said company of young Canadians might fulfil. And I find, in the various paragraphs, that this company of young Canadians will precisely deal with fields coming under local jurisdiction, under provincial jurisdiction, and sometimes under exclusively provincial jurisdiction.
For instance, clause 15 reads as follows:
The company may . . .
(a)	engage in community development work in urban and rural areas in Canada;
(b)	organize and carry out programs designed primarily to widen the social and economic opportunities of young people who leave school before completing their schooling;
(c)	organize and carry out programs to assist young people who are economically or socially handicapped to obtain greater benefits from their schooling and to reduce the number of young people who leave school before completing their schooling;
(d)	assist vocational training projects by the provision of teacher-counsellors, or otherwise, in co-operation with agencies engaged in vocational training, and organize and carry out projects to emphasize the importance of such training;
(e)	undertake recreation programs for young people where recreation programs are not available;
(f)	undertake programs in public health in cooperation with and under the supervision of local authorities and provide services in connection with public health projects;
(g)	engage in teaching of home economics in areas of deprivation and provide services in connection therewith;
(h)	organize and carry out programs for the development of co-operative undertakings in education, community development and other related fields of endeavour-
Here are, Mr. Chairman, with the Canadian constitution in my hand, matters and powers coming under provincial and local authorities.
Under section 92, the Canadian constitution exclusively confers to provincial authorities and indirectly to municipal authorities, all
23033-413J
Company of Young Canadians local, regional, civic, professional, social and educational matters.
This is a further intrusion of the present federal government in fields coming under provincial jurisdiction. I will be told in reply that the government itself will not take action, that a company will be set up to deal with those collective, social and educational matters.
But from the constitutional point of view, the federal government is not in a position to set up corporations or to provide corporations or individuals with public funds to be spent in fields coming under exclusive provincial jurisdiction.
I wish to recall particularly the ruling made by Lord Atkins, on behalf of his peers, in 1937, with regard to unemployment insurance. I know that the Liberal federal government, in 1951, quoted a paragraph from this ruling of Lord Atkins in order to justify its intrusion in the field of university education, suggesting that the central government had the right to establish a fund to be distributed among individuals and corporations.
But the quotation overlooked at the time, and by the prime minister of the day himself, was the second paragraph of Lord Atkins' ruling to the effect that, in so doing, the central government had no right to give that corporation or company sums of money and funds to be spent in fields or in matters coming under exclusive provincial jurisdiction.
If it is wished to create a unitary government, if it is wished to make away with provincial autonomy and responsibilities, let us be so informed: we shall just pick up our baggage and go back home. Every effort has been made, in the past three months, whether it be the Science Council of Canada, the National Arts Centre and, today, The Company of Young Canadians, to extend the tentacles of centralization in every field coming under provincial jurisdiction.
Mr. Chairman, at this stage, I should like to object to section 15. And I repeat my objection, namely this government puts the cart before the horse. Instead of meeting with the provinces to secure their agreement, in short instead of establishing a parliamentary committee here in Ottawa on the 1966 administrative responsibilities the government still proceeds unilaterally, violating the spirit and the letter of our Constitution, and moving towards a centralized government which wants to deal in every field directly and indirectly. In my opinion, this way of doing

June 16. 1966

Company of Young Canadians things must stop, this government must stop going ahead unilaterally, establishing itself in a field directly or indirectly through companies of corporations, and then offering its co-operation to the provinces.
In the province of Quebec as it was under the Lesage administration, and as it will be under the Union Nationale administration, we are jealous of our provincial autonomy; I wish to lodge a protest and I ask this government to stop its intrusions and its hypocrisies, in short to refrain from adding to the constitutional muddle which exists in our country.
Mr. Chairman, it is the reason why I object to section 15. I hope that a stop will be put to those tactics.
the volunteers will do in any particular community. That is, they do not settle things in advance. However, the clause does give the citizens of Canada some terms of reference of the activities of the company which are based on suggestions which have already been made to the government by communities, agencies, etc. I have quite an extensive list of projects which have been developed in response to requests from the federal and provincial governments, departments, private agencies and groups in every part of Canada. It was in order to meet the kind of requests which have already been received that the legislation has been introduced in this form, which I think is helpful.


Mr. Laflamme:: Mr. Chairman, I cannot at this stage let go unnoticed the intervention of the hon. member for Sherbrooke (Mr. Allard) who is doubtless well-intentioned but whose right I question of making an uncalled for outburst such as he has just made on the establishment of a company which, at the very least and once and for all will attempt to show throughout Canada, in every Canadian province, that youth may, if it so wishes, be proud of their province and of their country.
Mr. Chairman, I cannot in any way understand why the hon. member for Sherbrooke should want to raise an ivory tower or create a storm on paragraph 15 of an act the main purpose of which is to help youth through consultation between federal and provincial organizations.
I submit, Mr. Chairman, that this is not an intrusion. I think that the hon. member for Sherbrooke who is sitting in this house as an independent member should rather be proud that the parliament of the Canadian nation should be trying to establish an organization the purpose of which would be to teach all the young people from all parts of the country that Canada is the land of youth, the land of each and every one of its citizens, more precisely of the voters of my honourable friend's own constituency.
[English1


Gordon Harvey Aiken: Mr. Chairman, I should like to ask the parliamentary secretary, or whoever is piloting the bill at the moment, why it was necessary in subclause (f) to put in the words, "in co-operation with and under the supervision of local authorities".
[DOT] (9:00 p.m.)


John Ross Matheson: Mr. Chairman, none of the paragraphs in clause 15 predetermines what


Gordon Harvey Aiken: What I have to say, Mr. Chairman, relates back to some remarks which were made by the hon. member for Sherbrooke. I will not go the whole way with him in what he has said, but he did raise a point which has been bothering me and I should like to see it more clearly spelled out in the bill that we will not have any trouble when this company starts its operations.
It is clearly spelled out in paragraph (f) of the clause that if The Company of Young Canadians undertakes a program in public health it must do so in co-operation with, and under the supervision of, local authorities. I think that is proper drafting and I have no objection to it. But what is the difference between paragraph (f) and, for example, paragraph (d), which authorizes vocational training projects, or paragraph (g), which refers to the teaching of home economics in areas of deprivation, and services provided in connection therewith?
The point I am trying to make is that there is a possibility of the company's barging in on a provincial field and attempting to set up, without the prior consent or approval of the province concerned, a teaching or educational project.
It has been pointed out that the first part of clause 15 is limited by the words:
In furtherance of its objects, the company may, in consultation where required or advisable with federal, provincial or other interested governmental authorities or agencies-
I believe that this may not be strong enough wording to do what is desired here. I think it does not indicate that The Company of Young Canadians should only operate in a given field, particularly that of education, in collaboration with, provincial authorities if the provincial authority concerned gives some approval to the projects.

June 16. 1966

I am not at the moment going to move an amendment, but I would throw this point out and ask whether the words "in consultation where required" are strong enough. Perhaps the wording should be similar to that in paragraph (f), which uses the expression "in co-operation with and under the supervision of local authorities". I do not know what difference there is between paragraph (f) and the other paragraphs.
I am not raising this point, Mr. Chairman, to cause difficulty, because we favour very strongly the principle of young Canadians becoming involved in national and international affairs. But if we are not careful, when we are incorporating the company we may unwittingly be causing it trouble. We may unwittingly be giving the company broader powers than it should have, and thus place it in difficulties which I can foresee at this point. This is one of the difficulties, and I think the clause should be more carefully worded. I do not think that the words "in consultation where required" are sufficiently strong for the purpose. One may consult; but certainly one is neither bound nor required after having consulted to do anything that the other party has requested.
As I say, Mr. Chairman, I think we should spell this point out very carefully before we go further with it. I hope that some thought can be given to rewording the preliminary part of clause 15 so that we will not have The Company of Young Canadians barging into difficulties before it properly gets started on its duties, simply because parliament has not been specific in giving directions to the company.


John Ross Matheson: Mr. Chairman, my hon. friend referred to paragraph (f) of clause 15 dealing with public health programs. Obviously, the nature of public health is such that any company of young Canadians project in this area would have to be conducted under supervision.
In his comments I think the hon. member touched broadly on the whole question of the constitutionality of The Company of Young Canadians. This question has been studied by the law officers with the most meticulous and thorough care. The question raised by the hon. member and by others is whether or not this bill is entirely constitutional with reference to section 93 of the British North America Act. Reference has been made to
Company of Young Canadians education. Section 93 of the British North America Act, 1867 commences:
In and for each province the legislature may exclusively make laws in relation to education-[DOT]
It is true that clause 15 in its different paragraphs refers to schools, schooling, vocational training, the teaching of home economics and co-operative undertakings in education. However, this presents no constitutional difficulty whatever. It will be noted by members of the committee that the bill provides simply for the establishment of The Company of Young Canadians. It is an act to incorporate a company or corporation which is not an agent of Her Majesty; that is provided under clause 20. It will be noted that the company shall be deemed to be a charitable organization in Canada; that is provided for by clause 22.
There has been a line of cases which have been carefully considered in the drafting of this bill. It has been decided, both in the Supreme Court and in the Privy Council, that companies incorporated by the dominion under the Companies Act-now corporations-or by a special act of parliament have all the powers given to theta by their charters or acts of incorporation, and may exercise those powers consistently with sections 91 and 92 of the British North America Act. These corporations, according to the judicial decisions, are subject to provincial laws of general application, such as laws imposing taxes, or relating to mortmain, or requiring licenses for certain purposes, and so on.
My hon. and learned friend will recall the relevance in this matter of the Great West Saddlery Company Limited case of 1921 and the John Deere Plow Company v. Wharton case of 1915.
Dealing more specifically with the constitutionality of the bill with regard to education, we find that private acts incorporating religious orders and their power to teach have been passed at different times by parliament without any question ever being raised as to the validity of the legislation. In 1957 we incorporated the Oblate Fathers of Assumption Province, and among the powers granted we find in section 7 that-
-the Corporation may . . . erect, maintain, improve and conduct schools, seminaries, colleges, halls, churches, hospitals, orphanages, etc.
[DOT] (9:10 p.m.)
The following section grants to the corporation power to acquire and to hold property, mortgaged or otherwise. These powers, of course, would have to be exercised within the
6528	COMMONS
Company of Young Canadians framework of provincial laws. I would stress this fact to my friend, the hon. member for Sherbrooke. These powers, I repeat, now contemplated have to be exercised within the framework of provincial laws.
I might mention in the same regard the passing of the Sisters of Charity in 1952, the Sisters of Providence in the same year, the Felician Sisters of Winnipeg during the session 1943-44, all of which are typical.
In another matter related to education, and quite parallel to the subject, that is to the practice of liberal and other professions, parliament also has no hesitation in legislating in connection with these bodies. For instance we, in this house, have created the Medical Association in 1913 and the Canadian Bar Association in 1921, although admission to the practice of medicine and law are entirely within provincial jurisdiction. These principles would also apply to the Engineering Institute of Canada incorporated in 1918, to the Canadian Institute of Chartered Accountants incorporation in 1951, to the Canadian Dental Association, incorporated 1942-43, the Canadian Nurses Association, 1947, and the Canadian Veterinarian Medical Association incorporated by chapter 87 of the Statutes of 1947-48.
All these precedents make it unnecessary to search for decisions confirming the right of provinces to their exclusive jurisdiction in relation to education. Bill C-174 does not interfere in any way with that right. We are only by this bill creating a corporation with powers throughout Canada, which rights are to be exercised subject to provincial laws; and we are creating a corporation which the provinces themselves could not create as the powers that they would grant would only be such powers as would be exercised within the province granting them.


Gordon Harvey Aiken: Mr. Chairman, I appreciate the remarks made by the parliamentary secretary, but actually they have not touched on the point I raised. I do not doubt that we have in parliament the power to organize a corporation, and to make it work. I am talking about the special program set out in clause 15. I grant you that in the acts the parliamentary secretary mentioned, general powers were given. But I do not think those powers were as specific as the words, "organize and carry out programs to assist-" lay down. Here we have words such as: "undertake recreation programs for young people- engage in teaching" which give definite powers to engage in something.
[Mr. Matheson.l
DEBATES	June 16. 1966
I am not really talking about the constitutionality of this bill. It is well known that we cannot, here, legislate beyond our powers, no matter how hard we try. I am arguing here that we should not pass a law which will intrude into provincial powers. I am not arguing that we should try to do something that we cannot do.
The question is not so much of constitutional difficulty as of practical difficulty. The practical difficulty is that we appear, without any words of limitation to be giving The Company of Young Canadians full powers in provincial fields. I suppose the company will have a legal department, and also lawyers. The lawyers will tell them that this bill does not mean what it says, because while it says the company can do certain things in the provincial field, that is not correct, because they cannot. I would think it would be simpler and clearer to put words into the statute to make it perfectly clear that the company cannot engage in fields of endeavour that are under provincial or municipal jurisdiction, without the supervision of provincial or municipal authorities. I do not see why words to this effect should not be clearly spelled out.
I am not trying to cause trouble, but rather, to prevent it. The broad words in clause 15, not limiting the powers of the company to go into provincial fields, are a delusion to those who will pick up the act and who will say: "This is our authority; this is what we can do", because some of those things they cannot do. That is why I raised my point: The company does not have the powers set out here. I do not think it is proper that parliament should put the words I have referred to, and others like, them into the act, without spelling out the limitations which are inherent in a federal act dealing with education, public health, and so on.
May I point out that subclause (f) carefully spells out that public health programs shall be undertaken in co-operation with and under the supervision of local authorities. That is proper. I do not see why there should be any difference with respect to other subclauses of clause 15.
Further thought should be given to the points I have raised, because we do not want to have constitutional problems. We have enough of those in this country. I think we ought to give The Company of Young Canadians the guide lines under which they can operate. We ought not to take the risk of having some lawyer point out that clause 15
June 16. 1966

does not comply with the constitution of Canada, and that the company is restricted from complying with that clause.


John Napier Turner: May I answer briefly the hon. member for Parry Sound-Muskoka. He recognizes that the company has only implicit authority within the constitutional limitation of power of the federal parliament. He wants to spell out those limitations in the clause of the bill he has particularly mentioned, as I understand it. He wants to do that by way of spelling out the guide lines for the company.
We have to assume that the words in the bill were very carefully drafted: "consultation where required" as I understand, means, where required constitutionally. The words "or advisable", mean where the co-operation of the local or provincial authorities is advisable, from the point of view of tact. The words are: "where required or advisable with federal, provincial or other interested governmental authorities or agencies". Those words point out that tact is necessary before the company gets into any field jointly occupied by the federal or provincial agency, or in the special case of clause (f), where public hospitals, and so on, are under the control of local or municipal authorities. I think were we to make the words more stringent, we in effect should be handcuffing the company, which is an experimental body pioneering in new fields, and which is conscious of its constitutional limitations. If the committee were to require in each case absolute acquiescence as a condition precedent to every new move that is proposed, we should be unduly handcuffing the company.
The words I have previously referred to refer to the fact that the company will get the co-operation of municipal, local and provincial bodies, and the words are probably the best balance that the draftsman could manage.
[DOT] (9:20 p.m.)


Gordon Harvey Aiken: Something the minister said does not ring a bell with me. He says that the words "in consultation" should cover the situation. Let us suppose that they have consultation in every case. The minister knows that consultation means that you go and talk to somebody about a matter. Then let us suppose that you disagree. You have carried out the requirement of consultation but you would have been better off to have had no consultation at all. It is like asking for something which you know will be refused.
Company of Young Canadians
Consultation ties the thing up to a degree, but does not give it any legal status. This still does not answer my problem. If the company has to have consultation with a provincial or municipal government before entering upon certain projects, should there not be something else, because consultation does not have any legal significance? If there is agreement, that is fine. But if the company has not agreement, has consulted and been turned down, then where does that leave it? It leaves it in a worse position than if it had never consulted at all.


John Napier Turner: I think the management has to be left to the company, in the context in which the hon. member is talking. If you made the words any more stringent, that would hamstring the ability of the company to move into new fields. We have to rely on the good judgment of the executive director and the council where they decide it might be feasible to achieve the co-operation of other authorities already in a certain field. With the greatest respect, and quite understanding the argument so ably adduced by the hon. member for Parry Sound-Muskoka, I do not see how the words could be better balanced to achieve what he wants.


Horace Andrew (Bud) Olson: A few moments ago the parliamentary secretary to the Prime Minister attempted to equate the constitutionality of this to certain religious orders and other charters that have been passed by the House of Commons. I do not think there is any possible way of equating that kind of organization with the kind being set up under this bill. In spite of the argument the parliamentary secretary has advanced that clause 22 names this as a charitable organization, so that it can receive funds under the provisions of clauses 21 and 22, I think it is generally understood by hon. members that the primary source of financial support for The Company of Young Canadians will be funds from the treasury of Canada.
Clause 19 states:
For the purposes of the Public Service Superannuation Act,
(a)	the company shall be deemed to be a public service corporation within the meaning of section 23 of that act;
(b)	the executive director and the officers and employees of the company shall be deemed to be employed in the public service-*
Taking all these clauses together, there is no possible way of drawing a parallel between this corporation and such things as religious orders. There may be a possible

June 16. 1966
Labour Relations
comparison between the passing of laws granting charters to such bodies and the passing of legislation to establish The Company of Young Canadians, but the actual functions that The Company of Young Canadians may take on, and the basis of its financial support, are completely different.
The hon. member for Parry Sound-Muskoka has raised some valid arguments on the problem of getting into provincial jurisdiction through the operations of an organization sponsored by the federal government, and referred specifically to the matter of public health in clause 15(f). I draw attention to clause 15(c) which refers to schooling and education and says that the company will have the power to-
-organize and carry out programs to assist young people who are economically or socially handicapped.
Taking this in its broadest sense the company will have power to set up an education program to assist the economically and socially handicapped. Surely this allows the company to move into the field of education. I admit that the over-all clause stipulates "in consultation where required or advisable with federal, provincial or other interested governmental authorities," but this leaves it to the discretion of the company to consult. This is what is troubling me-


Mr. Mcllraifh:: On a point of order, I wonder if the hon. member who has the floor would permit the Prime Minister to make a very brief announcement that I believe will be of interest to all hon. members?


Horace Andrew (Bud) Olson: I would be very happy to yield to the Prime Minister.


Richard Albert Bell: With the Speaker in the chair.


George James McIlraith: Then I shall ask that the committee rise, report progress and ask leave to sit again later this day.
Progress reported.



LABOUR RELATIONS


Lester Bowles Pearson: Mr. Speaker, the government has been advised by Senator MacKenzie, the mediator appointed by the Minister of Labour (Mr. Nicholson), that he has proposed a settlement to the parties to the dispute on the seaway which is acceptable to the representatives of

the employees and which the St. Lawrence Seaway Authority is prepared to accept if the government advises the authority that the settlement proposed by the mediator is in the national interest.
In the view of the government such a settlement of the dispute in this essential service at this time is in the national interest and we have so advised the seaway authority. The terms of settlement, as is customary, will be made known by the parties concerned without delay.
[DOT] (9:30 p.m.)


Michael Starr: Mr. Speaker, in saying a few words after hearing the announcement made by the Prime Minister (Mr. Pearson) this evening, I think our position on this side of the house can best be summarized by saying: Good; we are glad to see the government has come out of its lethargy and has taken responsibility in these matters which have a vital interest, and a national interest.


Herbert Wilfred Herridge: On
behalf of this goup, Mr. Speaker, I wish to congratulate the Prime Minister (Mr. Pearson) on the announcement he has made, which is a recognition by both parties of the principle of collective bargaining.


Mr. A. B. Patterson (Fraser Valley):: Mr. Speaker, we wish to associate ourselves with the expressions of appreciation and satisfaction over the settlement of this particular problem. We recognize it as the second settlement in just a few days and we hope that other matters which are pending will be solved in this way as well.
[Translation1


Mr.   C.-A. Gauthier@Roberval: Mr. Speaker, I join all the other members in congratulating the right hon. Prime Minister (Mr. Pearson) on having settled and so prevented this strike. It seems that if the government had acted as promptly in every case, these last calamities would not have happened. I should like particularly to congratulate the right hon. Prime Minister and the government.


Mr. Speaker:: The house will now resume the study of the business interrupted a moment ago.
June 16. 1966

[English1



COMPANY OF YOUNG CANADIANS


[Stage Direction]
The house resumed consideration in committee of Bill C-174, to provide for the establishment of The Company of Young Canadians-Mr. Pearson

Mr. Batten in the chair.
On clause 15-Powers.
Horace Andrew (Bud) Olson: Mr. Chairman, as I was saying before we paused to hear the very important announcement by the Prime Minister, there are some valid objections which can be taken to the way clause 15 is written. As the hon. member for Parry Sound-Muskoka pointed out, in subclause (f) the company will have authority to set up programs in public health; but even there it goes on to say that this must be under the supervision of local authorities, and so on. There are, however, other areas of exclusive provincial jurisdiction such as in subclause (c) of clause 15 where they are required only to ask the advice of or consult with provincial and local authorities if the company feels it is necessary to do so, or if they are disposed to ask for the advice of the other levels of government.
I was about to point out what may be a ridiculous example, and I think it is precisely the point which the hon. member for Sherbrooke was making. It says that this company may organize and carry out programs to assist young people, who are economically or socially handicapped, to obtain greater benefits from their schooling, and so on. Suppose, Mr. Chairman, that this Company of Young Canadians in its enthusiasm found an area where some of the people were handicapped because they were confined to the English language, and set up a program to teach French. This might cause a little disturbance. I can think of one situation which might be worse; suppose they found an area where some of the people were handicapped because they were confined to the French language and found that it would be economically and socially beneficial to the people if they were able to speak English. In this case I think some local authorities might resent it as an invasion into the exclusive provincial jurisdiction in education. As I read this clause I do not see anything which would prevent a really enthusiastic group of young Canadians setting up this kind of thing; perhaps not specifically this, but there are other areas in which, under the authority of
Company of Young Canadians this clause 15, they are in a position to do things which-and this is what the hon. member for Parry Sound-Muskoka and the hon. member for Sherbrooke have pointed out -have been exclusively and constitutionally assigned to the provinces.
I should like the Minister without Portfolio or the parliamentary secretary to explain this wording so that we can determine whether the executive director and others can get involved in this kind of a program, and whether they have to ask the advice of the provincial government and local authorities only when they feel perhaps they should, or whenever they are disposed to do so. There is nothing there which requires them to do so.


John Ross Matheson: Mr. Chairman, in response to my hon. friend the member for Medicine Hat may I say that the projects have been and are being developed in response to requests from federal, provincial and private agencies and groups from all parts of Canada. With regard to the hon. member's point concerning constitutionality, the situation in respect of involvements in any of these areas is somewhat analagous to the incorporation of an insurance company. Such companies must act in terms of insurance under provincial laws, but that does not alter the power and right of the federal parliament to incorporate such companies.
The position of the federal government is that the bill establishing The Company of Young Canadians is a proper exercise of its power to incorporate companies with national and international purposes. Under section 92(11) of the British North America Act the provincial governments can only incorporate companies with provincial objects. The constitutionality of the bill must be judged solely on this basis. The powers listed in clause 15 are purely an elaboration of some of the objects of the company. Whatever the company may do in the exercise of these powers, as set out in clause 15, which brings it within the field of provincial jurisdiction, must be subject to provincial law. The point which my hon. friend raises about the possibility of an executive director going off on a frolic of his own, searching out enterprises, is not really realistic.
There has been such a demand for assistance in various areas along the lines as generally indicated in clause 15, subclauses (a) to (i), that for a considerable time the corporation is going to have much difficulty in meeting these requests.
6532	COMMONS
Company of Young Canadians


Mr. MacLean (Queens):: Mr. Chairman, the question which I should like to put to the Minister without Portfolio is this: I feel the arguments put forward by the hon. member for Parry Sound-Muskoka are very forceful indeed. In reply the minister said that in cases where the jurisdiction lay with the provincial authority there would be consultation. What is the position where a province might say that this is purely within their jurisdiction, that they do not want The Company of Young Canadians messing around in their educational system or something of that sort? Under those circumstances would a province be entitled to opt out and obtain financial assistance to set up a company of young Albertans or a company of young Newfoundlanders?


John Napier Turner: Mr. Chairman, may I say briefly that as I understand the argument of the parliamentary secretary, which I think he presented very ably, this statute creates a company which can operate only within the powers which come within the jurisdiction of the parliament of Canada.
[DOT] (9:40 p.m.)


Richard Albert Bell: It is a federal creature, though?


John Napier Turner: It is a federal creature, and it will only exercise the powers involved in operating within the jurisdiction of the parliament of Canada. Where consultation is required because joint provincial agencies are already in the field or where consultation is found to be and deemed advisable-because after all the company wants and seeks the co-operation of provincial and local agencies-then of course it will on its own good judgment seek consultation. It is only clothed with the constitutional powers that any federal corporation has in law, consulting where required under other statutes or joint federal-provincial programs; consulting where advisable only to achieve better results. Obviously if it were to offend or go beyond this jurisdiction and run into objections, properly and constitutionally founded, from provincial corporations, then of course, as I gather it, the company would desist.


Edward Richard Schreyer: Would the minister not go one step further and agree that this federal corporation, if it were to operate in a field that comes under provincial jurisdiction, would have to go actually further than just consultation with the province, and would in effect have to obtain the approval of any province involved? I believe that is what the

DEBATES	June 16, 1966
hon. member for Parry Sound-Muskoka was trying to elicit from the minister, but the minister for some reason seemed to be avoiding that point. Consultation would in itself not seem to satisfy the constitutional requirements, and there would have to be approbation given by the provinces.


John Napier Turner: Surely that is where the word "required" comes in, as opposed to the word "advisable". I accept the interpretation proposed by the hon. member.


Mr. Howe (Wellinglon-Huron):: Mr. Chairman, in the reply given to the hon. member for Queens, by the parliamentary secretary regarding some of these projects, he intimated that the government had received many requests for services of this kind. Will the parliamentary secretary or the Minister without Portfolio enlighten the committee by mentioning some of these specific requests that have been received from municipalities and provincial organizations?


John Ross Matheson: 
Walter Gilbert Dinsdale: The parliamentary secretary to the Prime Minister mentioned several areas of activity that would involve voluntary groups already operating in these areas. In addition to the problem that has been raised by the hon. member for Parry Sound-Muskoka I should like the parliamentary secretary to give an explanation as to how consultation would take place with voluntary groups already operating in areas of these activities. The parliamentary secretary mentioned one activity involving the rehabilitation of prisoners, which is an activity already covered extensively by the John Howard Society and other groups. He also mentioned the possibility of The Company of Young Canadians serving on Indian reservations. The department of Indian affairs is already partially involved in matters pertaining to reservations. I think it is imperative that there be consultation with band councils; but how would this type of consultation be carried out in order to avoid duplication and, particularly in respect of Indian reservations, with the knowledge that the Indians would welcome this sort of assistance?


John Ross Matheson: Mr. Chairman, the assistance extended and the work that would be done with Indian bands and with Metis councils would be done entirely in co-operation with the appropriate government authority. In respect of the assistance provided to juveniles who have run into difficulty with the law, this again would be a matter that would have to be negotiated with an agency with the full authority and support of the properly constituted authority, either the attorney general of the province, or the office of the Solicitor General in case of a federal institution. Obviously this company is going to have to tread warily and work discreetly within the properly constituted authority in each case.
The point I want to make is that the demand for the services of these young people is legion. They are going to have great difficulty in meeting them, but will only respond to what are proper requests from properly constituted authorities. In some instances, as the Minister without Portfolio has indicated, there will be a problem of jurisdiction and this will have to be cleared up. As I conceive of the situation, this company is not going to be out looking for work, but will do their level best to meet some of the exciting demands imposed on them.
23033-414J
Company of Young Canadians


Walter Gilbert Dinsdale: 
John Ross Matheson: Mr. Chairman, with respect to organizations such as the John Howard Society, the Elizabeth Fry Society, and so on, a number of such agencies have suggested projects and have asked for assistance, and of course it is in these areas first that assistance will be allocated. With respect to indigenous Canadian peoples, the band councils have made certain requests and these would be the ones given high priority for consideration.
1Translation1


Henry P. Latulippe: I agree wholeheartedly with the hon. member for Sherbrooke (Mr. Allard) when he says that this bill falls completely within provincial jurisdiction. An attempt is being made to legalize this bill, but that is impossible since, directly or indirectly, the matter falls within the jurisdiction of the provinces.
Mr. Chairman, I cannot see any advantage to setting up in Canada such an organization as that of The Company of Young Canadians. This company, yet to be formed, will be made up strictly of bureaucrats. Young people, as a rule, know what they want. They want to see improvement. They need many things which we are unable to give them. The present system is unable to do so. If we give them the possibility, through this company, to make more requests directly, well, the federal government will not be capable to meet them.
June 16, 1S66

Company of Young Canadians
Because, these days, young people ask for aU sorts of things. On the other hand, they have all kinds of organizations. For instance, local organizations, social organizations, community centres; they have the chambers of commerce, the junior and the senior, through which countless requests are made to both provincial and federal governments.
Even now, the governments cannot meet all the requests. Why then should another company be set up with its new bureaucracy costing Canadians millions which will render but few services? If we could afford it, then I might say: perhaps. But as the whole matter is properly provincial, I feel it should be left to the provinces themselves to deal with. I feel the federal government should not butt in where it has no business. We should take care of our business and let the provinces mind theirs. The federal government should not trespass in every sphere of provincial jurisdiction.
The provinces know what they want. The only thing they want, the only thing they need also, the wherewithal.
Let us work toward the setting up of a financial system that will reflect the physical potential of the country. There is a tremendous physical potential, as you know, and it is the reason why it is desired to set up such a body. But, if the financial potential is lacking, then the physical potential is unavailable. It is our duty to organize the financial possibilities to meet the demands of these agencies. As you are aware, the needs are not being met satisfactorily. There are a lot of things which we could do, but our financial means do not allow us to do so. Thus, instead of going ahead, we remain at a standstill, we do nothing. What is the good of creating other agencies which require more financial means, if we are unable to settle that problem.
Let us begin with this main problem, which is factor number one of the whole economic structure and, afterwards, the other factors can be settled. In fact, the other factors will be settled automatically.
The only thing missing in Canada, as everyone knows, is the financial power to realize what we have to realize, to develop what we have to develop. The young people know that there are natural resources to develop, they build great hopes on natural resources, but they know that we are not able to develop them ourselves, that they have to be developed by foreigners. We have to accept

foreign capital and we remain simple workers, simple water-carriers.
This is not the only problem to settle, the setting-up of this new company, the so-called company of young Canadians; there are many other factors and many other problems to settle, and as long as you do not get at the root of the problem, things will go as they are going now, backwards. And foreigners will develop our wealth and we will take what is left.
Last year, profits of two billion dollars were made by various companies, and these profits went beyond our border. Those two billion dollars, we do not have them. If we owned our wealth and resources, we would have two billion dollars more to put into circulation, two billion dollars to meet needs and demands.
Let us open our eyes. It is possible to settle these matters, but you will never settle them otherwise than through the financial economy of the country, never otherwise.
The young people do not want piles of debts and piles of taxes; they want the common heritage which is theirs. They want to have that. But they are not interested in piles of debts and piles of taxes that are made and continue to be made.
Hence, the organization of The Company of Young Canadians does not interest the young, it interests above all those in politics, those who are trying to make political capital for the next general election.


Herman Maxwell Batten: Shall clause 15 carry?


Gordon Harvey Aiken: Mr. Chairman, having raised this point, I should like to have the assurance of the minister that the points that have been raised were fully considered by the law officers of the crown, and that they have given an opinion that the clause in question is perfectly constitutional.


John Napier Turner: I can give that assurance, Mr. Chairman.


William Marvin Howe: Mr. Chairman, I have one further question. I am not too satisfied with regard to the organizations which requested the setting up of a group of young Canadians such as this. I wonder whether there have been requests from provincial or other interested government bodies or agencies in connection with the type of assistance The Company of Young Canadians will supply as set out in clause 15.
June 16, 1966
COMMONS DEBATES	6535
Proceedings on Adjournment Motion
Have there been any government agencies, municipal or provincial, which have asked for assistance in vocational training, for instance?


John Napier Turner: There have been requests from private and government agencies.


William Marvin Howe: Which provinces have asked for such assistance?


John Napier Turner: There have been literally hundreds of requests. We have not the complete list here.


William Marvin Howe: There are only a few provinces, and the minister could probably tell us which ones have asked for assistance in the vocational training program.


John Napier Turner: This is primarily the concern of the provinces. In regard to this whole problem, Mr. Chairman, I wish to say that The Company of Young Canadians will only respond to requests; it will not move out unilaterally seeking opportunities.
Progress reported.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate Chamber.
[DOT] (10:10 p.m.)
And being returned:
Mr. Speaker informed the house that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bills:
An Act to amend an Act to amend the Combines Investigation Act and the Criminal Code.
An Act to amend the Research Council Act.
An Act to amend the Yukon Act.
An Act respecting the organization of the Government of Canada and matters related or incidental thereto.
An Act respecting allowances to persons being trained under technical and vocational training programs.
An Act to amend the Fair Wages and Hours of Labour Act.

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.
1Translation1

Maurice Allard: Mr,
Speaker, last Wednesday, June 8, I asked the Prime Minister (Mr. Pearson) the following question, which is to be answered tonight. Is the Prime Minister in a position to advise the house whether the government intends very shortly to grant a bonus for bilingualism to certain federal civil service employees? If so, when may we be informed of the amount of the bonus and of the terms under which it will be granted?
Mr. Speaker, on April 6, 1966, the Prime Minister announced in the house his policy on bilingualism. You may recall that those new methods to encourage bilingualism applied to the posts which require a university education, to the higher posts and to those held by clerks and secretaries.
If such undertakings by the government are liable to improve gradually the fate of federal bilingualism, it must be noted that in addition to being late, the measures are weak and will take too long to come into force.
Some thought should have been given to extending bilingualism to crown corporations, the members of the armed forces and the R.C.M.P. It is inadmissible that after a hundred years of existence within the Canadian federation, the French Canadians, in spite of the government's new policy, should be obliged to work in English only and suffer also from prejudice and discrimination.
Bilingualism should have been given a real status and the conditions under which bilingualism answers a need set forth, instead of leaving the decision to the whim of a new secretariat within the privy council.
The government neglected also to set up a board of appeal and arbitration for the grievances which will no doubt arise.
But let us put aside tonight any thorough criticism of the new policy in order to invite the government to act quickly within the limited field where it agreed to go ahead.
Although several groups of civil servants and intermediary bodies suggested to the government in the last few years to grant a
6536	COMMONS
Proceedings on Adjournment Motion bonus to all bilingual federal servants, the federal cabinet has decided to give it only to certain clerks and secretaries.
What is happening exactly? Nothing has been decided yet. The Civil Service Commission should recommend to the government the amount of that bonus and the conditions under which it can be granted. Following this recommendation, the cabinet and the Treasury Board were to take action and announce the special bonus. But we are still waiting. French Canadians are willing to wait a few days longer, since they have been waiting for over a hundred years to receive a fair and equal treatment.
I like to think that the Parliamentary Secretary to the Prime Minister (Mr. Walker) or whoever is to answer me will have good news for us tonight.
[English1


Mr. J. E. Walker (Parliamentary Secretary to Minister of National Revenue):: Mr. Speaker, in reply to the question, perhaps the best thing I can do is to remind the hon. member of the Prime Minister's statement on government policy respecting bilingualism in the public service. The Prime Minister has said that it is the objective of the government to make the public service of maximum benefit to the people of Canada by attracting to it the most competent, qualified Canadians available in all parts of Canada. He said as reported at page 3915 of Hansard for Wednesday, April 6, 1966:
To this end, and having regard to the character of our country, the government for several years has been taking practical steps to encourage bilingualism in the federal public service as part of its fundamental objective of promoting and strengthening national unity on the basis of the equality of rights and opportunities for both English speaking and French speaking Canadians.
Then, continuing:
The government hopes and expects that, within a reasonable period of years, a state of affairs in the public service will be reached whereby
(a) it will be normal practice for oral or written communications within the service to be made in either official language at the option of the person making them, in the knowledge that they will be understood by those directly concerned-
And also:
-communications with the public will normally be in either official language having regard to the person being served; . . . the linguistic and cultural values of both English speaking and French speaking Canadians will be reflected through civil service recruitment and training;-
At that time the Prime Minister went on and made further statements, but because of

DEBATES	June 16, 1966
the three minute time allotment for answers to these questions I shall have to remind the hon. member of the statement that the Prime Minister made namely, that in addition, public funds are being expended for the training of people who wish to have fluency in both official languages.
In particular, the Prime Minister said this, as reported at page 3916 of Hansard:
In respect of bilingual clerical and secretarial positions, it has been agreed in principle that a higher rate of pay will be paid in future in respect of clerical and secretarial positions in which there is the requirement for a knowledge of both languages and where both are used in the performance of duties, providing the incumbents of such positions meet standards of competence established by the Civil Service Commission.



PUBLIC BUILDINGS-OTTAWA-HEIGHT OF PROPOSED DEFENCE HEADQUARTERS

Stanley Howard Knowles: Mr. Speaker, on Monday, June 6, and again on Wednesday, June 8, I put questions to the Prime Minister concerning the announced intention to have a national defence headquarters building erected a few blocks west of Parliament Hill in such a manner that it would tower over the Peace Tower of this building. On the first occasion the Prime Minister indicated that he would take my question as notice. On the second occasion he said he was having an examination made of the comparative measurements of the two buildings.
[DOT] (10:20 p.m.)
I should like at the outset of these very serious remarks that I wish to make, to indicate that I have got as much information as I could regarding these buildings, and I should like to put the information on record. I understand that the height of the Peace Tower, from its base to the top of the tower, is 296 feet. The information given us concerning the proposed national defence headquarters is that the height of the building from the ground to the top would be 460 feet. In terms of the two buildings as such, therefore, the proposed national defence building would be 164 feet taller than the Peace Tower on Parliament hill. However, as everyone knows, the Le Breton Flats area west of parliament hill where it is proposed to erect the national defence building is lower than the elevation of parliament hill, and this fact must be taken into consideration.
June 16. 1966

I have endeavoured to get the facts as to the comparative elevations of these two locations. In the main I was able to get my information from the engineers' branch or the surveyor's office of the city of Ottawa. Before I did that I discovered, as most members know, that there is a bench-mark tablet on the side of the Peace Tower, placed there by the geodetic survey of Canada, which indicates that the height above sea level at the point of that bench-mark is 293.959 feet.
However, that bench-mark is a few feet above ground level, so one has to ascertain the level at the base of the tower and that level, according to the information I got from the city of Ottawa, is 281 feet above sea level. On the other hand, the elevation at the corner of Fleet and Booth Streets down in Le Breton Flats, at approximately where I understand the defence tower is to be built, is 184 feet. In other words, that area out there is 97 feet lower than the point where the Peace Tower rises from the ground. So, one has to deduct that 97 feet from the difference between the height of the buildings themselves, which is 164 feet, and this leaves a net difference in elevation above sea level of 67 feet. In other words, the proposed national defence tower would rise 67 feet higher than the Peace Tower on this building.
I urge very strongly, Mr. Speaker, that reconsideration be given to this proposal. I do so for several reasons and I can only give them in the form of headings. First of all, I think there is a symbolism that should be considered. I believe that the Peace Tower of this building represents the civil authority of government in this country, and in my view it should be higher than the tower that would represent the military authority. I believe it is appropriate that the tower that graces this hill is known by the name of the Peace Tower, and I think a tower dedicated to peace should be a taller structure than the tower of a building built for the purposes of national defence.
I also believe there are aesthetic reasons to take into account. I think the skyline of the city of Ottawa is something of which we can be proud. I submit one of the elements in it that gives us pride is the Peace Tower on parliament hill. If the proposed national defence tower were being built two, three or four miles away from parliament hill the arguments that I advance might not
Proceedings on Adjournment Motion apply, but a tower that is only to be a few blocks away, rising higher than the Peace Tower, would detract from the Peace Tower and spoil the skyline of the city of Ottawa. I have looked at it a number of times since I raised this question by driving in from various directions and I believe we would regret very much if this skyline and the beauty we have here were spoiled in this way.
I think that a government that is in power for only a short time, even a parliament that is here for only a short time, has to be careful when it takes a course of action that has an effect for decades, perhaps for half a century, or for a century to come. We are not erecting something that can be torn down by the next parliament or the next government. We are erecting something that will stay, and we ought to think carefully about such a course of action before it is proceeded with.
There are many other questions that could be raised. There is the question of the huge cost involved. Some of my friends to my right are raising that. There are questions respecting the need for so much space, and there are questions of military strategy. It seems to me rather strange that the defence headquarters would be put so close to the parliament buildings themselves. But at any rate while all these arguments are part of the story and should be considered, in the main I think the symbolism is the most important factor and it should not be overlooked.
Mr. Speaker, one newspaper in an editorial against me on this matter says that I am living in the past and asks if I do not realize that skyscrapers reflect progress. I think the story of the Tower of Babel gives the answer to that. I hope we are not going to build another one.


John B. Stewart: Mr. Speaker, the hon. member for Winnipeg North Centre (Mr. Knowles) has suggested that this proposed new national defence headquarters building will tower above the Peace Tower. I should like to suggest that this is not an accurate description of the proposed arrangement, because the relationship between the Peace Tower and this building is not one of close proximity as is implied by the expression "a few blocks away".
The figures which the hon. gentleman has put before the house are almost identical to those I have worked out. The difference in
6538	COMMONS
Proceedings on Adjournment Motion the elevation of the bases of the two structures, would be 96 feet, and the difference in the elevation at the tops of the main structures would be 67 feet. My calculation does not include the flagstaff on the top of the Peace Tower. It may be some small consolation to the hon. gentleman that this will reduce somewhat the difference between the very tops of the two structures.


Stanley Howard Knowles: We arrived at the same figure.


John B. Stewart: I will not press that point which, from the moans opposite, does not seem to be received favourably.


Stanley Howard Knowles: I wasn't moaning; I was saying that we arrived at the same figure of 67 feet.


Gordon Harvey Aiken: I was moaning.


John B. Stewart: I have a very limited time compared to the long time the hon. gentleman had, and I should like to continue. These two buildings will be approximately one mile apart. I do not think the difference in height of 67 feet, when placed at that distance, is likely to produce the towering-over effect that the hon. gentleman fears.
Perhaps I should say that various attempts were made to design this new building. The building has been under active planning since early in 1962. A mass building was considered, but this would have produced a very large floor space and would have imposed hardships on the people working in the building. A very tall tower was another possibility, but that was rejected for very good reasons which I believe were somewhat along the line which the hon. gentleman has implied this evening.


Stanley Howard Knowles: Hear, hear.


John B. Stewart: Consequently, we have here a building which is designed to produce an efficient internal structure without producing a very heavy or massive effect on the one hand or a tall towering effect on the other hand. It is a matter of aesthetic judgment. The hon. gentleman is perhaps more sublime on these points than I am.


Mr. Speaker:: Order. The hon. member for Lotbiniere.

DEBATES	June 16< 1966
[DOT] (10:30 p.m.)
(Translation)



CANADIAN BROADCASTING CORPORATION-POSSIBLE VIOLATION OF ACT IN PUBLIC AFFAIRS PROGRAM

Mr. Auguste Choquette (Lotbiniere):: Mr. Speaker, the point I wanted to raise tonight refers to the Broadcasting Act, Chapter 22, Statutes of Canada, 1958.
Mr. Speaker, the hon. member for Brome-Missisquoi (Mr. Grafftey)-whom I do not want to attack meanly for, on the contrary, I consider him as a gentleman-recently took part in a French program better known as "Les Affaires de l'Etat", or "The Nation's Business" in English. I hold nothing against him personally, but rather against the C.B.C. on the one hand, and the Conservative party, on the other, who, in my opinion, were guilty of a glaring violation of the Broadcasting Act.
Section 17 says:
No licensee shall broadcast in dramatized form any program, advertisement or announcement of a partisan political character.
And a little further section 29, subsection 2, reads as follows:
The Corporation is bound by the provisions of Part 1,
which includes section 17 that I have just quoted.
Now, Mr. Speaker, first I want to remark that the Broadcasting Act is obsolete. It should undergo a thorough revision for it is archaic and contains provisions which are difficult to apply and make it something like the old Quebec liquor act, an hypocritical law, because one could not do otherwise than break it.
The Broadcasting Act states first of all, as I was saying, that political broadcast shall not be dramatized. But the act does not define dramatization. We do not know exactly what it means.
For instance, the mere fact that the Leader of the Opposition will be there is enough to lend a dramatic character to a program, for he has the knack of dramatizing everything.
Therefore, would the Leader of the Opposition's participation in a program warrant its cancellation? This would present a problem difficult to solve.
But when the hon. member for Brome-Missisquoi appeared on that program, instead of dealing with politics, as is usually the case on that program, he described at length a
June 16. 1966	COMMONS
member of parliament in action, and during his narrative, the opera voice of the hon. member was heard against a musical background all through the program. So, instead of an informative program, it turned out to be a play, where the hon. member was seen at various meetings, or going around his riding chatting with farmers, attending a horse auction, motoring in a convertible in his shirt sleeves. In other words, if that is not dramatization of a political program, I think we will never be able to define what dramatization is. From that point of view, I think the act should be revised because, as I said, it is obsolete.
Second, another provision of the act states that the sponsor and the political party must be identified. In my opinion, Mr. Speaker, this tends to commercialize political programs which should be on a higher plane and really be informative.
The Broadcasting Act says that there shall be no program of a partisan political character on any day that an election is held in the municipal, provincial or federal field. It does not say whether a program dealing with federal politics may be put on the air while a municipal election is being held. There is something illogical and indefinite in the act. It will have to be revised.
Finally, the act says that no broadcast of a partisan political character shall take place within 48 hours of an election. I think, Mr. Chairman, that this is going a little too far. A 24-hour time limit would be more like it. I believe it would be adequate since the politicians taking part in those programs must necessarily have a sense of responsibility and they cannot use texts of a defamatory character on account of the censorship; besides, such a censorship is required by the Board of Broadcast Governors.
Finally, Mr. Speaker, I should like to make another suggestion, that is all private stations should be compelled to do like the C.B.C. and give the opportunity to all political parties to be heard.
What is now happening for example, in the province of Quebec is that channel 10 has a much higher rating than the C.B.C. In Quebec city, channel 4, which is a private station, has also a much higher rating than the C.B.C. Then it is difficult to reach the public through the C.B.C.
DEBATES	6539
Proceedings on Adjournment Motion
If private stations were compelled, pursuant to the Broadcasting Act, to make time available to political parties as the C.B.C is compelled to do, I think that the situation would be improved.
In closing, Mr. Speaker, I would ask the minister representing the government: Will there be an investigation and will legal action be taken against the C.B.C. which, with the complicity of the Conservative party, has infringed the Broadcasting Act?
If the government fails to take action, if there is no investigation, then I should advise the minister that I shall personally and shortly take legal action against the Canadian Broadcasting Corporation for having openly violated the provisions of section 17 of the Broadcasting Act, in a broadcast in which the hon. member for Brome-Missisquoi took part, who has surely behaved like one of the hosts of "Les Couche-Tard" or as a member of the "Cre-Basile" show, instead of having regard for the informative character that must be maintained in a political broadcast.
I should like to know from the minister whether there has been an investigation or whether additional measures should be taken.


John Napier Turner: Mr. Speaker, I am very flattered to represent the Secretary of State (Miss LaMarsh) who, in spite of her admiration for the hon. member for Lotbiniere (Mr. Choquette) cannot be with us tonight. I shall inform her, as well as the C.B.C. and the B.B.G., of the arguments of the hon. member which are always strong and clear.
I believe the hon. member for Brome-Missisquoi (Mr. Grafftey) will not sleep very soundly tonight following the argument of the hon. member for Lotbiniere. But, without trying to explain things on behalf of the member for Brome-Missisquoi, I may perhaps explain why he used a dramatic way to present his program. Since the program of the Conservative party is such a dull one, it is obvious that if he did not make an effort to be dramatic in order to catch the attention of his audience, most of the latter would turn off their television set.
[DOT] (10:40 p.m.)
Furthermore, I should like to say that, with the musical background it sounded like a commercial, so that it did not annoy people too much. In fact, it was another way to seduce the people, by letting them listen to the hon.
6540	COMMONS DEBATES	June 16, 1966
Proceedings on Adjournment Motion member for Brome-Missisquoi for at least 15 minutes.
I doubt very much that, even according to the definition of the word dramatic given by the hon. member for Lotbiniere, the hon. member for Brome-Missisquoi was really dramatic. Be it as it may this matter could be decided by the court, or by the B.B.G., and I shall leave it to the competent authorities.
Anyhow, I must thank the hon. member for Lotbiniere on behalf of the minister for his very pioneer, optimistic and progressive opinions. He is, by the way, a first-class performer himself.
IEnglish1
Motion agreed to and the house adjourned at 10.41 p.m.

Friday, June 17, 1966