[Recorded by Electronic Apparatus]
Tuesday, April 15, 1997
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[English]
The Chairman (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): I see a quorum, so we'll begin the meeting.
When we completed the session before lunch, we referred back to the fact that when we were dealing with clause 3 we had stood it in response to a request by Mr. Hermanson, I believe, to come back and clarify a few things. I assume Mr. Benoit is going to address those concerns.
Mr. Benoit, do you wish to comment?
Mr. Leon E. Benoit (Vegreville, Ref.): Yes. Thank you, Mr. Chairman.
What happened was that on March 6 at a meeting here I asked for written clarification of this clause of the bill. At that time Mr. Migie said he would give that written explanation and for some reason we Reform MPs didn't receive it, so we asked if we could hold it up until we saw a copy. I have a copy of that document now.
The Chairman: It was my understanding, Mr. Benoit, that it had been circulated, so something happened, but you do have it now.
Mr. Leon E. Benoit: It hadn't gone to any Reform MPs.
The Chairman: Sorry. It was not intentional, I can assure you.
Mr. Leon E. Benoit: Anyway, the explanation didn't really answer the questions that were asked. It was a very weak explanation. In fact, some of our people who did the research on this made comments like it's almost an insult getting an answer like that and a lot of what is in the answer really doesn't explain it. They put it a little more strongly than that, but basically it was a very inaccurate explanation.
I have some further questions to follow up. First of all, what proposed section 3.93 does is limit the liability of the directors, officers, and employees of the corporation if they rely in good faith on financial statements represented to them by an officer of the corporation or on the report of a person whose profession lends credibility to the statement made by that person.
Proposed section 3.94 provides for indemnification of directors, officers, and employees of the corporation if they acted honestly and in good faith with the view to the best interests of the corporation. In other words, these two sections would impose on employees of the Canadian Wheat Board the same duty of care and fiduciary duty as on officers and directors.
When you look at this, I know the witnesses at past meetings have said this is in other legislation. In fact, it is in no other legislation that our researchers could find. Including employees in this section was not in line with what was in the Farm Credit Corporation Act. It wasn't in any of the other crown corporation acts we saw and it wasn't even covered under.... I think someone referred to this, and maybe I'll read what Mr. Migie or his people wrote and then I'll respond to it.
He wrote in his answer that this good faith reliance defence is identical to that provided private sector corporations under the Canada Business Corporations Act, section 123.4, that the same defence is provided in the Financial Administration Act for directors of crown corporations.
It goes on to comment on directors but it never refers to employees. That was what we had asked about in the first place, why employees are lumped with directors and officers, because it was very unusual.
The answer went on to say that similar wording appears in the Canada Business Corporations Act, section 124.1, the conditions in 3.94(a) and (b) of Bill C-72 being identical to those of section 124.1(a) and (b) of the Canada Business Corporations Act.
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But when you look at it, Mr. Chairman, in fact that isn't the case. When you look at these provisions as a package, they're a logically related package. The real question that should have been asked, and that was asked, was why employees would be indemnified under this legislation, why they would be placed under a general fiduciary duty. In other federal statutes these kinds of provisions are common, but none include employees. That's the point we were getting at and it wasn't dealt with in this answer.
Further research indicates that this is true of provincial statutes as well. Employees are not responsible for the activities of the company as a whole, since for the most part they do not hold positions of knowledge and power that would make imposing such duties on them reasonable.
The question of imposing fiduciary duties on employees was not raised in either Industry Canada's discussion paper, proposed amendments to the Canada Business Corporations Act, or the Senate banking committee's report on corporate governance.
On March 6, when I asked about this and Mr. Migie promised a written response, I expected far more. The answer that was given is both untrue and misleading. It is actually quite a leap from the FAA and section 10 of the Farm Credit Corporation Act to proposed sections 3.93 and 3.94 ofBill C-72. These sections are not found in other corporate governance. They are much broader than what is in any other legislation we could find. The government is breaking entirely new ground with Bill C-72.
So I have a series of questions based on what was given to us by our experts, and indeed House of Commons experts.
The legal counsel for the Library of Parliament helped us identify three important issues that arose from the government's inadequate response. On the first question, it was said in the response that the board set-up is so unique that it requires something different. What is so unique and complex about the workings of the Canadian Wheat Board that requires all its employees, right from the top to the bottom, to have the same fiduciary duties that are normally placed on only directors and officers? How is the Canadian Wheat Board so different that the employees should be included in this group?
Again, the Canada Business Corporations Act covers many types of corporations with many different businesses, but none of the others do this.
Mr. Howard Migie (Director General, Adaptation and Grain Policy Directorate, Policy Branch, Department of Agriculture and Agri-Food): On the first issue, about the directors and the senior officers of the corporation, that has the identical language. As was pointed out the last time this came up, the employees were not in the Canada Business Corporations Act or the Financial Administration Act. We asked our drafters to look at a number of pieces of legislation, and one that they looked at was the Farm Credit Corporation Act where, as pointed out, there was a provision for employees.
In part, we were told that common law often covers employees with respect to the scope of their employment, and the Farm Credit Corporation had introduced it. With the Canadian Wheat Board, where so many billions of dollars are borrowed and such a significant financial issue is at stake, it was felt it would be useful to cover the employees also, not just the directors and the senior officers.
Mr. Leon E. Benoit: I have great concern for the employees of the Canadian Wheat Board. What this does is hold an employee responsible in a way that only directors and officers have been in the past. I don't know how the employees are going to feel about this.
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The other concern is that I'm wondering if by including employees, you're not letting the directors and officers escape the responsibility that is normally theirs under other pieces of legislation and under legislation covering private corporations.
Mr. David Byer (Legal Counsel, Department of Agriculture and Agri-Food): There are a couple of points that I think need some clarification.
When you began, you read proposed subsection 3.93(3). I think you have to distinguish that subsection from the others. You're reading them as though they're all part of indemnification provisions. Proposed subsection 3.93(3) is not really an indemnification. It's a shield against liability.
Mr. Leon E. Benoit: I understand that.
Mr. Byer: On its terms it is not as broad-based as section 10 of the Farm Credit Corporation Act. Section 10 reads:
- No director and no employee of the Corporation or person acting under the instructions of either
of them or under the authority of this Act is personally liable for anything done or omitted to be
done in good faith in the exercise or purported exercise of any powers conferred by this Act.
The other point you were making was that because these provisions are here, employees of the Canadian Wheat Board would find themselves exposed to some form of liability. I simply don't agree with that. I feel that these provisions serve both to support and shield employees from civil liabilities. It makes it crystal clear for them what conditions have to be met in order to benefit from these provisions. If they were to fall back on the common law they would have to refer to the current jurisprudence, and as you know, that can change from time to time. This would give them certain inherent rights that they could anticipate and rely upon because they are crystallized in the statute.
Mr. Leon E. Benoit: The information we got regarding the Farm Credit Corporation Act was that in fact it doesn't impose general fiduciary duties on employees. Section 10 does say that employees will not be personally liable for acts done or omitted in good faith, but this is much closer to basic common law - the common law of vicarious liability whereby an employer is responsible for acts of an employee acting within the scope of his or her duties.
Mr. Byer: If by fiduciary duty you're referring to proposed subsection 3.93(1), I would say that it falls somewhat short of a clear fiduciary duty. However, I was simply addressing my comments to proposed subsection 3.93(3). In my view, that is more restricted than section 10 of the Farm Credit Corporation Act, which provides a much more effective shield, if you will, from civil liability than does proposed subsection 3.93(3) in this bill.
Mr. Leon E. Benoit: What we're interested in is what this section of this piece of legislation does and doesn't do with employees, as well as with the directors and officers.
My question remains unanswered. How can the provisions, in the words of the government response that I got from you, and this is a quote, ``provide a clear and more formal basis for employee indemnification than what may be available in common law''? You said that this provides a clear and more formal basis for employee indemnification. What is lacking in the common law of vicarious liability, and how would this proposed wording change that?
Mr. Byer: The common law deals with general concepts of principal and agent -
Mr. Leon E. Benoit: How does this clarify or change that?
Mr. Byer: - and whether you are acting as an agent in your role as agent. It also talks about not receiving indemnification in situations of gross negligence or gross misconduct. All of these terms have been debated and analysed by various courts. It's hard to say in any given set of facts whether someone would be indemnified or not.
There are tests laid out under proposed paragraphs 3.94(a) and 3.94(b) that talk about acting ``honestly and in good faith with a view to the best interests of the Corporation'' and (b) ``in the case of any criminal or administrative action or proceeding that is enforced by a monetary penalty'', they can demonstrate that they believed on reasonable grounds that their conduct was lawful. That standard is somewhat less than what is required to obtain a conviction on a criminal proceeding.
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These are tests that officers, directors and employees can look at to determine if in fact they have a right to claim indemnification from the corporation.
Mr. Leon E. Benoit: There was some concern that including employees the way they're included here could leave employees holding the bag if found solely at fault, even though they would subsequently be reimbursed by the corporation. That's the way it seems to read. It says they could be holding the bag, forced to pay. The legislation then says they'll be reimbursed by the corporation. Well, I sure wouldn't want to be an employee of the Canadian Wheat Board working under conditions like that. Is that not what this says?
Mr. Byer: With these provisions I would feel quite comfortable working as an employee of the Canadian Wheat Board. It would give me certain rights to claim against the corporation that I might not otherwise be sure of in common law.
Mr. Leon E. Benoit: But in the meantime the employees can be left holding the bag.
Mr. Byer: That's the case today. This would give them something they don't have today.
Mr. Leon E. Benoit: Are you saying that the way this is written, there is no way it could put responsibility on the employees that's normally put only on the directors and officers?
Mr. Byer: All I can say is that the standards for indemnification would be clearly laid out in the legislation if this section were approved. Employees could look to those sections to determine their rights to obtain indemnification.
Mr. Leon E. Benoit: That's not the question I asked, though.
Mr. Byer: I know, but that's all -
Mr. Leon E. Benoit: Why can't you answer the question I asked? You seem hesitant to do so.
Mr. Byer: It's a question that depends on facts. I can't envisage every possible factual situation.
Mr. Leon E. Benoit: I think it's a very dangerous thing to have legislation that could jeopardize the security of these employees in a way that isn't normally provided in other legislation.
Mr. Byer: I don't think this jeopardizes their security any more than at present.
The Chairman: As a point of clarification, Mr. Benoit, when those standards are set in proposed paragraphs 3.94(a) and (b)...help me in making your point here. If an employee were accused of something and the employee could prove that he or she met the standards in proposed paragraphs 3.94(a) and (b), what puts the employee in jeopardy? It seems to me that these proposed paragraphs are a very good protective standard that employees can go back to and say, look, I acted honestly, etc., so get off my case.
Mr. Leon E. Benoit: This is brand new legislation. We haven't seen it anywhere before. You'd have to ask -
The Chairman: If you were an employee, would you not want that kind of protection?
Mr. Leon E. Benoit: I wouldn't want the risk of having a responsibility heaped on me that is normally heaped only on directors and officers. I think that's absurd. I don't think it's reasonable to do that to employees.
Mr. Bernie Collins (Souris - Moose Mountain, Lib.): There are a couple of things I'd like to raise, in fairness to our witnesses here today. This is the second time the statement has been made that material being sent out is untrue and misleading.
I would like to know from Mr. Benoit, would he say that the material he received is untrue? In what case is it untrue? Where is it misleading? Or is he of the opinion that it may be something less than the response he wants, in that way being inadequate? There's a hell of a difference between telling these people that they have provided us with material that's untrue and misleading.... That's the second time.
Getting back to this, we have in this legislation a mechanism - and I think you touched on this, Mr. Chairman, and certainly our legal counsel said it - whereby if I'm going to be indemnified and protected within the law, as an administrator in a school, they said I could not be sued. But the board could be sued. Teachers by and large are of the same mind. But it wasn't as clear as what we have in this case, where it virtually says that all employees acting in good faith, acting responsibly and conducting themselves within what would be expected of any good employee, will be protected. If they go beyond that, I guess they have to face the elements of the law.
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I really have a problem with this going on, with saying what elements are untrue and misleading. If that isn't the case, I think we should have those removed and go to the point where it may be an inadequate response.
Mr. Leon E. Benoit: With all respect, Mr. Collins, I meant exactly what I said. I quoted from one expert we went to, the legal counsel, who said that it's almost an insult, that it's not true and it's misleading.
One of the areas they were referring to was in the government response, where it said that the provisions are drawn from the FAA and the Farm Credit Corporation Act. The FAA does not include employees in its coverage, and the Farm Credit Corporation Act does not impose general fiduciary duties on employees. The facts are different from what was presented in the government response.
Mr. Bernie Collins: Mr. Chairman, if I might go back so that we know, this is not the opinion of Mr. Benoit; this is the opinion of someone we don't know who has given his personal opinion. It may be very limited in scope. That's dangerous ground for us in hearings, if we have somebody who passes that kind of information.
If he wants to file it, that's a hell of a different thing. But I don't want to be left with this committee saying that it's the opinion of one of the respondents here who says, no, it's not me but it's somebody else. I really have trouble with that. In fairness to our witnesses here today, if he wants to file that, then he should file it. On the other hand, if he wants to retract it I'd sure like to hear it.
The Chairman: Mr. Benoit, then Mr. Hoeppner and Mr. Chrétien.
Mr. Leon E. Benoit: Mr. Chairman, I am upset with Mr. Migie for a couple of responses he gave earlier, plus the written response from his staff - responses that I believe are misleading. They are not the kind of response we want from an expert witness who comes here before us.
The Chairman: You've made your point.
Mr. Leon E. Benoit: No, I want to say where that was, Mr. Chairman. It was when he implied in an answer at an earlier meeting that the panel had recommended this cash purchase of grain. He was saying that it was in here because the panel recommended the same thing. In reality the panel recommended that it was clearly only if we had an open, competitive market where farmers had a choice about shipping through the board or directly to the American market. That is completely different -
The Chairman: That verges on another clause that we're not discussing right now.
Mr. Leon E. Benoit: I was just defending myself against what Mr. Collins has thrown at me.
The Chairman: All right. Mr. Hoeppner.
Mr. Leon E. Benoit: I would just appreciate open, upfront answers here. That's all.
The Chairman: You've made yourself clear. Mr. Hoeppner.
Mr. Jake E. Hoeppner (Lisgar - Marquette, Ref.): Mr. Chairman, I have other concerns. I don't think we'll ever have a civil litigation on mismanagement or financial losses. I've had two different legal firms look at it. Proposed paragraph 3.93(3)(b) says that directors, officers and employees are not liable for breach of duty under subsection 3.93(1) or (2) if they rely in good faith on ``a report of a lawyer, notary, accountant, engineer, appraiser or other person whose position or profession lends credibility to a statement made by that person.''
Anybody is an expert. I hope that as a farmer, I am an expert in producing grain. If I made a statement these people could go on, if I said that we're going to have no crop at all so you'd better hang on to this grain, and they knew otherwise, still nobody would be responsible for it. My solicitors tell me it's so open that you can never proceed with a court case against anybody for mismanagement or civil litigation on this basis because it's so wide open.
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The other thing I brought forward before was that criminal activity should not be protected in any organization -
The Chairman: It says here -
Mr. Jake E. Hoeppner: In proposed section 3.94 it says the board of producers will pay for it if there is a financial judgment and criminal activity. That's the way I read it. If I'm wrong, then correct me on that.
The Chairman: It says right here in proposed paragraph 3.94(b), Mr. Hoeppner:
- in the case of any criminal or administrative action or proceeding that is enforced by a monetary
penalty, believed on reasonable grounds that their conduct was lawful.
- If it were deemed to be a criminal action taken by them, they're not protected.
Mr. Jerry Pickard (Parliamentary Secretary to Minister of Agriculture and Agri-food): Mr. Chairman, I think we're getting awfully personal with our officials. I do resent the fact that there has been suggestion that our officials lied or presented material that was not accurate. Quite frankly, Mr. Benoit made that statement.
Then Mr. Benoit said it was an opinion he got from some source. Third-party rumour shouldn't be a source under which people who are trying to bring forward information at this committee should be attacked. I think if Mr. Benoit wishes to table the name of that person and bring him forward, fine. I do feel it is not in the best interests of this bill, in the best interests of this committee, or in the best interests of anyone to take innuendo and hearsay and through them on the table as his opinion. That is what he did.
Secondly, he may not be happy with the answer that was given, and I do understand that. Everybody at this committee understands there are different viewpoints from everyone here. Quite frankly, I think we treat the people who are here as witnesses with respect, and I don't see that happening.
The Chairman: Mr. Chrétien.
Mr. Leon E. Benoit: Mr. Chairman, I think I should be given a chance to respond to that.
The Chairman: Mr. Chrétien, you're on the list.
[Translation]
Mr. Jean-Guy Chrétien (Frontenac, B.Q.): If you don't mind, Mr. Chairman, I will letMr. Leon Benoit go first, and then I will ask questions later.
[English]
The Chairman: We're going to move along. I think people have expressed their concerns and we're not going to take a whole lot more time on this.
Mr. Benoit and then Mr. Chrétien.
Mr. Leon E. Benoit: Thank you, Mr. Chairman.
First of all, regarding the parliamentary secretary's comments, I volunteered to table from the record, from previous meetings, the questions I've asked and the responses given that have led me to reach the conclusion that we're not getting satisfactory answers. It's not because they're not the right answers but because they are misleading. I will do that and I will table those with this committee at a future committee meeting.
The Chairman: Will you table the name and the report of the individual who makes that claim? You claim you're not doing that yourself.
Mr. Leon E. Benoit: No, I'm not going to table the name of the person who made those comments, but I'll table the rest, and the rest is enough, Mr. Chairman.
I do have one further question -
The Chairman: No, we're going on to Mr. Chrétien.
[Translation]
Mr. Jean-Guy Chrétien: Could the parliamentary secretary explain to us how the Canadian Wheat Board will operate smoothly once elections are held in June 1998?
First of all, the number of members of the board will rise from 5 to 15. Previously, only two out of five commissioners had to be present for a quorum, that is to say, 40% of the board members. Do you know how many members will be needed for a quorum, and do you know whether that will be included in clause 3, in an appendix, or in the regulations?
I would also like to hear your opinion about the salaries. When we had four or five board members, we could give the chairman a salary ranging between $115,000 and $144,000. His assistant could receive a salary somewhere between $110,000 and $129,000, while two or three other board members were earning between $110,000 and $129,000.
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The board of directors would be quite large, with 15 members. Five would be appointed by the Governor in Council, and the other ten would be elected democratically by Wheat Board users. I don't know whether the party in power thinks that salaries is a high priority issue, but I think that the board members' salaries and travelling expenses, as well as operating expenses, should not represent a high percentage of the Canadian Wheat Board's budget.
After your answer, Mr. Pickard, I'll be asking you a supplementary.
[English]
Mr. Jerry Pickard: Okay, if I could go back, you were discussing quorum and other technicalities that would be part of the operations of the board, after we have an elected board in place.
During the period between now and the election of the board, certainly they'll be looking at all of the responsibilities and operations of the board. I believe that in the interim they will be setting out requirements for operation, but to be quite clear about it, my view is that the board would have much of the jurisdiction over itself with regard to quorum, with regard to setting those individual decisions, as to make certain that the voice of the board is protected. Really, that's what it is.
It would be much the same, in my viewpoint, as this parliamentary committee having the right to be its own director regarding a lot of decisions we make. I applaud that as a very democratic move, giving a great deal more say to the board itself over how it's governed and how those operations occur.
With regard to pay and salaries, I think you have to realize that most of the board members are part-time. They're not going to be full-time board members. They will be making decisions over the salary area, but those decisions will be made public regarding this mixed entity. That public information and the number of meetings, the operation and everything else would have to be justified in the same way as municipal councils work in all the communities around. They represent a group of people and they make those types of decisions with regard to it.
It's been my experience over the past that when people do get together and they are working on governance issues, they are very responsible to the people they represent. Certainly if anything does fall out of line, always there is a tremendous backlash, and I believe that would happen. It's the natural process of democracy. If they make a decision and the majority of people disagree with the decision, they have to face the electorate, or the people who have put them in office, in the future.
The Chairman: Okay. The bells are ringing. We will recess now and reconvene immediately after the vote.
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The Chairman: We'll reconvene. We were having a question from Mr. Chrétien. We'll let him finish.
Okay, we're going to go to Mr. Benoit, and then Mr. Hoeppner. If Mr. Chrétien comes back, we'll complete that, and then we will call the question on clause 3.
Mr. Benoit.
Mr. Leon E. Benoit: Thank you, Mr. Chairman. I only have two more questions. I'm going to ask just two direct questions, one at a time, and I would like an answer to them.
First, do the fiduciary duties imposed by Bill C-72, coupled with the indemnity provision, imply that employees could be found solely at fault even though they could subsequently be reimbursed by the corporation?
Mr. Jerry Pickard: Could you read that again, Leon.
Mr. Leon E. Benoit: I am following through with the questions here. The question relates to our discussion about the fact that in this legislation the employees are included along with directors and officers. The interpretation we have had is that this legislation could put an unusual responsibility on employees of the board.
So my question is, do the fiduciary duties imposed by Bill C-72, coupled with the indemnity provisions, imply that the employee could be held solely responsible - in other words, that the directors and the officers wouldn't be - even though I know it does say in the legislation that they would be compensated.
So I understand that the compensation thing is there, but could they be made to pay a price, take the responsibility that is normally given to...only that of the director and officers?
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Mr. Jerry Pickard: We'll have the legal counsel comment afterwards, but it seems to me that any person working in any area of responsibility has to fulfil those functions in the way they are expected to do them, responsibly and so on. If they don't, they can be held legally liable. We see this happening in education, as Bernie mentioned, and in most business endeavours, where the corporation isn't the only group liable when certain actions occur. So I think that's a normal happening in our society.
What this is doing is saying that if that employ happens to fall within that area and it's not their responsibility, they would have recourse to regain the lost revenue or funds if they were taken to court.
Mr. Leon E. Benoit: That's not my question. The inclusion of employees is unusual. It isn't in any other legislation, not the way it is in this bill. It appears they could be held responsible, whereas normally the directors and the officers would be held responsible. I want to ask if in fact that could be the case.
Mr. Byer: There are several stages that have to be gone through here. First of all, you have to show there is a link between what the employees' duties were and the act or violation that is alleged against them. It's not a case of the employees being liable for whatever the corporation does. It has to be in relation to their duties for the corporation.
Secondly, proposed section 3.93 does set up a standard they are to meet. If they can demonstrate they met that standard, then it would be very difficult for anybody to find they had violated the duty of care that's prescribed in the legislation.
Thirdly, even if you could find that there might be some question as to whether or not they have met the duty of care described in proposed subsection 3.93(1), they would have a defence under proposed subsection 3.93(3) if they could show they had met the conditions in that proposed subsection. If they cannot show they have met the conditions in that proposed subsection, relying on financial statements or on reports of lawyers, notaries, accountants, etc., then it is possible they could still meet the conditions in proposed section 3.94 for indemnification if they can show they acted honestly and in good faith and with a view to the best interests of the corporation.
So there are different stages that have to be gone through, and each of these provisions provides a measure of shielding, if you will, for employees from ever being found personally liable.
Mr. Leon E. Benoit: My concern is that the directors and officers could be let off the hook in terms of responsibility and that responsibility instead could fall to the employees. Relative to other legislation, in your expert opinion do you believe that could be the case?
Mr. Byer: I would have to say that with regard to other situations with corporations in general, for example, employees could be found liable. They could be impleaded by their corporation for liability where the corporation has been found liable. So I don't see that the common law system would provide better protection for employees than what these provisions would provide. It's quite the contrary.
Mr. Leon E. Benoit: What about the second part of the question, that directors and officers in fact do not have to take responsibility, which normally is assumed in other corporations?
Mr. Byer: No, they would have to meet the test I described earlier.
Mr. Leon E. Benoit: Relatively speaking then, you would say this legislation doesn't, couldn't and wouldn't shield officers and directors relative to other legislation.
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Mr. Byer: The degree of protection that's offered to directors and officers mirrors what is in section 119 of the Financial Administration Act for crown corporations. The only issue I had thought you were exploring here is what happens with employees.
Mr. Leon E. Benoit: It's the comparison. The way this is written, in one interpretation we were given, because employees are added in here, whereas they aren't in the other legislation, they could end up having to bear responsibility where normally directors and officers would.
Mr. Byer: I would have to see that opinion. I don't understand the rationale.
Mr. Leon E. Benoit: Yes, and you don't agree with that opinion.
Mr. Byer: I don't understand the rationale behind it, so I can't comment on it. I just don't understand where it's coming from.
The Chairman: Mr. Culbert.
Mr. Harold Culbert (Carleton - Charlotte, Lib.): I I would like to comment on some points Mr. Benoit raises. With the solicitor being here, I would like to raise these points.
If none of these criteria were in here, whether they are for directors or employees or officers of the corporation, if they were just non-existent in here, there would still be that opportunity in civil law, would there not, for a farmer, an individual, a broker they were dealing with, who felt they were wronged by an error of an employee, by an error of an officer, by an error of a director, to have that right to take legal action? As I understand it, this is a bit of additional protection for the persons notated. Could you confirm that for me?
Mr. Byer: I would agree with that. I think it offers a level of protection they wouldn't otherwise have.
Mr. Harold Culbert: Exactly.
The Chairman: Mr. Hoeppner.
Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.
I know what Mr. Benoit is trying to say. My other concern - and I stressed this before - is that with proposed section 3.93, the loophole there for the employees to protect themselves, it will be very hard to prosecute anybody such that he is ever found liable. Will that not then tie the hands of the commissioners, or the elected Wheat Board directors, in letting go an employee who is really not doing their job? You have to have a reason of non-performance before you can let that person go.
Mr. Byer: Yes, and this establishes a level or standard of performance such that as long as they meet the standard they would be immune from liability from anyone. This does not mean, of course, that in the case of third parties they could not still sue the corporation.
Mr. Jake E. Hoeppner: My concern on this whole issue is that the only one who will have a financial loss in this corporation or whatever you call it - company or crown corporation - is actually the producer who will be filing for damages. So he's going to pay his own damages, because nobody will be eligible to be sued for financial loss.
Mr. Byer: He could sue the corporation.
Mr. Jake E. Hoeppner: But still the producer will have to pay that fine.
Mr. Migie: Collectively.
Mr. Jake E. Hoeppner: Why would you sue the corporation if you're going to pay the fine? It will just involve legal costs. To me it's a very weak way of getting your financial losses back. It will only be the producer involved -
The Chairman: Mr. Hoeppner, the bill would be paid collectively by everybody who is involved with the Canadian Wheat Board.
Mr. Jake E. Hoeppner: But can you see, Mr. Chairman, a farmer going ahead and trying to collect damages? What kind of support will he get from other farmers? They are going to pay the bill.
The Chairman: Are there not some lawsuits against the Wheat Board right now,Mr. Hoeppner?
Mr. Jake E. Hoeppner: Yes, but this doesn't pertain to that. Now the government is still responsible, according to the ruling I've seen. They have a duty of care to protect that investment.
The Chairman: But if an expense is incurred by the Wheat Board right now, all the expenses of the Wheat Board are taken out of the pool before it's paid back to the producers, is it not?
Mr. Jake E. Hoeppner: No, not necessarily. At least that's what I've been told, that the legal bills will be paid by the Department of Justice, which handles the suit.
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The Chairman: The point I was making is that farmers have seen fit to sue the Wheat Board before. I wouldn't want to mention any names.
Mr. Jake E. Hoeppner: But we have a different situation here. The government doesn't want to have the liability any more. That's why we are dealing with this bill. Isn't that right, Mr. Migie?
Mr. Byer: As with all other government departments, the Department of Justice is moving towards a cost-recovery basis.
The Chairman: Mr. Chrétien, you had a question before, and we'll give you the opportunity to complete that.
[Translation]
Mr. Jean-Guy Chrétien: Good. As you can see, I'm being quite reasonable today,Mr. Chairman.
Whichever one of you who feels he is the best one to answer should go ahead and do so. It would appear that about 500 regular, full-time employees are currently working at the Canadian Wheat Board. I would like to know what the Board's sales are for last year, or the average over the past five years. I would also like to know what the total administrative costs are. How much does it cost to sell one dollar's worth of wheat?
[English]
The Chairman: That's in the annual report of the Wheat Board, which has been circulated to all members, I believe.
Mr. Migie.
Mr. Migie: I've just been informed that the administrative costs worked out to $1.93 per tonne. That's for 1995-96.
The Chairman: Go ahead, Mr. Chrétien.
[Translation]
Mr. Jean-Guy Chrétien: And what are the Board's sales?
[English]
Mr. Jake E. Hoeppner: While we're on that report -
The Chairman: Just a minute, Mr. Hoeppner. It might be helpful to M. Chrétien if someone could give him another copy of the annual report of the Wheat Board, if he has not yet received one.
[Translation]
Mr. Jean-Guy Chrétien: Yes, yes, I understand, Mr. Chairman. You can make fun of me, but if I asked you what the Wheat Board's sales were, or how many employees the Board has or what the 1996 administrative costs were, well, I don't think many colleagues would be able to answer those questions. Even our witnesses don't know, and they must have...
[English]
The Chairman: No, they have to find it in the annual report, Mr. Chrétien. They're not day-to-day employees of the Wheat Board. If we'd asked that question when Mr. Hehn from the Wheat Board was here, I'm sure he could have answered you right off the top of his head.
Mr. Migie.
Mr. Migie: It was $42,473,178 for 1995-96. That's the total administrative and general expenses for running the Wheat Board. There are over 20 million tonnes that are moving
[Translation]
Mr. Jean-Guy Chrétien: Certainly the purpose of the bill that we are studying - very seriously, I hope - is to improve the image of the Canadian Wheat Board in the eyes of farmers, as well as the operations of the board. One way of improving it certainly would be to trim administrative costs.
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The administrative costs are $1.93 per ton, Mr. Pickard. Do you see those costs dropping substantially, staying where they are or going up?
[English]
Mr. Jerry Pickard: Mr. Chrétien, you are asking me to speculate on where the costs are going to go as the elected body takes over and operates. I'm quite certain that if the people who are elected do the job as well as they can, they will keep the costs at a minimum. They will work toward keeping the costs within line as well as they can. That's going to be their function. And certainly if you have elected people within the system they are going to look at that very critically and try to make those decisions. But for me to look into a crystal ball and suggest how those administrative costs will be after a new restructuring.... I can only suggest I believe they would move toward the best efficiency possible, knowing it affects their profit line and the profit line of everyone who elected them.
[Translation]
Mr. Jean-Guy Chrétien: But do you agree with me that the spirit of the bill is to improve the board? Yet if we're going to improve it, administrative costs should be going down, not up. If we end up with higher administrative costs, it would be better for us to keep the current legislation, which is 60 years old, and keep the few amendments that we have made.
[English]
Mr. Jerry Pickard: Mr. Chrétien, you have a hundred variables that enter the question of where the administrative costs are. We have inflation, our international competition, how the sales go ahead. There are a myriad of things - the amount of wheat that goes through the board each year. All those things have some effect on the final cost numbers. I have no question that an elected board, as I said before, will look after trying to keep those costs down as well as possible.
I can't forecast, nor can anybody here forecast, exactly what that administrative cost would be from year to year, but I think we are looking at the farmers having more control over the expenditures and the costs. That should bring economy, to a degree, into the system. People often point fingers and say, well, the government can't work as efficiently as private enterprise. In this case a mixed enterprise is in charge of operating that system, and I believe they will do it to the best of their ability. From my viewpoint, I think all you are doing beyond that point is crystal-balling or guessing what may or may not happen.
The Chairman: There has been considerable discussion on this clause. As I said a few minutes ago, I'm going to put the question.
Mr. Benoit: A recorded vote, please.
Clause 3 as amended agreed to: yeas 8; nays 3
The Chairman: Shall the title carry?
Some hon. members: Agreed.
The Chairman: Shall the bill carry? Do you want a recorded vote?
Some hon. members: Yes.
Bill C-72 agreed to: yeas, 8; nays, 3
The Chairman: Shall the committee order a reprint for use at report stage?
Some hon. members: Agreed.
The Chairman: Shall I report the bill as amended to the House?
Some hon. members: Agreed.
The Chairman: Thank you very much, committee members, Mr. Pickard, parliamentary secretary, and officials, for.... Yes, Mr. Chrétien.
.1700
[Translation]
Mr. Jean-Guy Chrétien: Will the honourable minister, the member for Hull - Aylmer, be here tomorrow at 3:30 as agreed upon?
[English]
The Chairman: Mr. Massé, President of the Treasury Board, will be before the committee tomorrow at 3:15 p.m. The meeting is at 371 West Block. I think Mr. Massé's schedule allows him to spend one hour with us, as the committee meets tomorrow.
An hon. member: Good.
The Chairman: This meeting is adjourned.