September 15, 1903


Motion agreed to. On section 13,


CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

I merely want to ask the hon. Minister of Justice, who is, of course, absolutely familiar with it, what would be the procedure for awarding compensation to persons whose land has been taken. As I understand it, under the law in regard to government railways-I am not very familiar with the later amendments to it-the land is absolutely vested in the Crown as it is vested under this section,; upon filing a plan and description in the land office of the registration district in which the land is situated. Then the Railway Act goes on to provide a procedure by' which the persons whose lands have been taken could obtain compensation. I do not see any procedure of that kind here, and it occurred to me that the provisions in the Railway Act might be wide enough to apply to the case of land taken Tinder section 13, although my recollection is that they would not be wide enough. If my impression in that regard is correct then it would seem to me that section 13 should be am-

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IND

William Findlay Maclean

Independent Conservative

Mr. MACLEAN.

ended by the addition of a subsection providing that the provisions of that Act for awarding compensation in such cases should be made applicable to the case of land taken under section 13.

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The MINISTER OF JUSTICE.

My intention was to provide for that in connection with section 15 which reads as follows :

The said commissioners shall have in respect to the said eastern division, in addition to all the rights and powers conferred by this Act, ail ithe rights, powers, remedies and immunities conferred upon a railway company under the Railway Act and amendments thereto, or under any general railway Act for the time being in force, and the said Act and amendments thereto, or such general railway Act, in so far as they are applicable to the said railway, and in so far as they are not Inconsistent with or contrary to the provisions of this Act, shall be taken and held to be incorporated in this Act.

They have all the powers that a railway company will have under the general Railway Act. That was the intention when we drafted section 15.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Does the Minister of Justice think that will afford a more expeditious means than the Exchequer Court in case there is mo agreement as to compensation ?

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The MINISTER OF JUSTICE.

I have consulted the officials of the department and the conclusion to which we came was that the provisions of the general Railway Act would be applicable, and that these commissioners would be iu tbe same position as an ordinary railway company. Of course, that would not give tbe right to go to the Exchequer Court.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

In that case, it is in reality the Crown, through the commissioners, who takes the property of the person expropriated, and my experience is that a procedure in the Exchequer Court would be more expeditious than resorting to the appointment of arbitrators for expropriation under tbe General Railway Act.

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The MINISTER OF JUSTICE.

This railway will be located in part far away from the centre where-the Exchequer Court sits, and I came to the conclusion that it would be inconvenient for a man whose property was expropriated between Levis and Edmonton, for instance, to come to the Exchequer Court. While in some respects tlie reference to tbe Exchequer Court is more satisfactory, yet I think the process we provide here will lead to a speedier solution of the difficulty, because it enables tlie question to be dealt with in the locality in which it arises.

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CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BORDEN (Halifax).

Very well.

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CON

Edmund Boyd Osler

Conservative (1867-1942)

Mr. OSLER.

When this agreement was first presented, I read it and I was especially struck with two points in it. One of these points was the fact that practically the government had no security from any

one to operate tlie eastern section, and the other point was in reference to clause 17, which says that no addition should be made to the cost of construction or to the capital construction account in respect to customs duties where direct importation of material was authorized by the government. It occurred to me that in these two points the contract was weak. Accordingly, I did what I would do in my own case ; I applied to the best authority on contracts that I knew of, and I asked for an interpretation of these clauses. I got the opinion of Mr. J. F. Smith, K.C., which I read to tlie House. There was an attempt to belittle that opinion by stating that Mr. Smith is a real estate agent who did nothing but draw up mortgages, and that lie had no knowledege or experience as counsel. Mr. ,T. F. Smith is a well known leading counsel and authority on contracts. He has been for many years the confidential adviser of two of the largest of our banks in Canada. He was for long years associated with the late J. J. C. Abbott, in connection with some of the largest contracts which Mr. Abbott, as a lawyer, drew up. I look upon Mr. Smith as an eminently safe and wise counsellor, and I would take his interpretation of that agreement most thoroughly if it were for myself. However, the matter seemed so important to me that I thought I had better fortify that opinion, and consequently I asked the firm of Messrs. Blake, Lash & Cassels-Messrs. Blake and Cassels -if they would give me a legal opinion on these two points in the contract. I received a letter from Mr. S. H. Blake. I may say that I submitted the contract to him, stating simply that I wished to be advised upon it. and he sent me a note saying that possibly from the long connection of his firm with the Grand Trunk Railway Company, he .might not be able to give me his opinion. He said that after he communicated with the Grand Trunk authorities, and if he was at liberty he would give me his opinion with Mr. Cassels. If he was not at liberty, then, as I was leaving Toronto for New York the day I saw him, I asked him if he would hand my letter and the questions on the contract to the man he thought best able in Toronto to give me an opinion on the subject

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LIB

Peter Macdonald (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. DEPUTY SPEAKER.

The discussion on this question would, come more appropriately under another clause.

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The PRIME MINISTER.

If the chairman will permit, we will waive the objection.

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LIB

Peter Macdonald (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. DEPUTY SPEAKER.

Very well, if it is the will of the committee the hon. gentleman can proceed.

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CON

Edmund Boyd Osler

Conservative (1867-1942)

Mr. OSLER.

I received this letter from Mr. Blake. I did not know whether it would be quite right to read it, but I have his authority for doing so.

Toronto, September 10, 1903.

E. B. Osier, Esq., M.P.,

House of Commons,

Ottawa.

My dear Osier,-John Bell telephoned me that he considered that under the circumstances I was precluded from giving an opinion. I consulted with Walter Cassels and other members of my firm and had much difficulty in finding any person in town and able to deal with the questions submitted. We at length came to the conclusion that no person would answer the purpose better than Mr. I. F. Hellmuth, K.C., and so I have sent him over all the papers, with the request that without fail by to-morro.v afternoon he would send you his conclusion in the matter. Regretting my inability to oblige you in this matter.

Believe me,

Faithfully yours,

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S. H. BLAKE.


I have received the opinion of Mr. Hell-muth on this matter and I have further received the opinion of Mr. Donald Macmaster, of Montreal. These are to me the most important clauses in the Bill, and as these opinions confirm my own first impression of the meaning of the clauses, I think they are extremely important, notwithstanding the assertion of the Minister of Finance that there was absolutely nothing in the BUI which would warrant the assumption that materials could be brought in free of duty. When I see a clause iu the Bill which is a little unusual, it strikes me at once that it was put there for a purpose. If there is no meaning in the contention that supplies may he brought in free under this contract, I would like very much to know why clause 17 is embodied in the contract with reference to the eastern section, and is omitted altogether in connection with the western section. If it has no meaning, surely it ought not to have been embodied in the Bill to make confusion. Now, Mr. Hellmuth's opinion is as follows : Toronto, September 11th, 1903. E. B. Osier, Esq., M.P., House of Commons, Ottawa, Ont. Dear Sir,-My opinion has been asked upon certain questions connected with Bill No. 235, intituled ' An Act respecting the construction of a National Transcontinental Railway,' now pending before the present session of parliament. The subject-matter with which I have been requested to deal is, as I understand it, as follows :- Clauses 15 and 16 in the Bill provide for the appointment of commissioners to superintend the work of construction, &c. In the agreement, paragraph 5 provides for the construction of the eastern division ; paragraphs 15 and 16 define the cost of construction. Paragraph 17 provides that ' no addition shall be made to the cost of construction or to the capital of construction account in respect of customs duties in cases where there is direct importation o! materials or supplies by the government.' Under these, it is asked, whether the company, i.e., the Grand Trunk Pacific, who agree to pay the government 3 per cent upon the cost of construction, cannot insist upon the govern-



ment exercising the power o£ importing all materials whether directly or through contractors without paying customs duties, so that the company will only he obliged to pay 3 per cent interest on the cost, exclusive of any customs duties. The answer to this must necessarily depend upon the legal construction of the documents, i.e., the proposed Bill and the executed contract attached thereto. . By paragraph 1 of the agreement, the government is defined to be His Majesty the King acting in respect of the Dominion of Canada by and through His Excellency the Governor General in Council. By paragraph 5, the eastern division shall be constructed by and at the expense of the government, &c. By paragraph 7, the company are specifically admitted to be interested in the economical construction of the eastern division. By paragraph 15, the expression * cost of construction ' of the eastern division is defined, and, although a large number of specific items are set out, there is nothing that even inferentially could be held to include customs duties. There is nothing whatever said about customs duties ; hut, even if it might be argued that under the words in that paragraph ' costs and expenses occasioned by the construction of the said division whether of the same kind as or differing in kind from the clauses of expenditure specially mentioned, including interest upon the money expended customs duties might be included, this is specifically negatived by paragraph 17, which paragraph is an independent paragraph governing the whole agreement, and every clause in same, including paragraphs 15 and 16, the latter providing for what might be called betterments made from time to time aFter the completion of the said eastern division. This is further made clear by paragraph 20, which speaks of 1 cost of construction ' of the eastern division ' ascertained in the manner defined in paragraphs 15 and 16 of this agreement.' Further, by paragraph 47 of the agreement, the company have a right to have determined by arbitration any dispute that may arise as to the manner or construction of the agreement, or amongst other things ' cost of construction ' ; and it is therefore clear this question might be raised under this paragraph. Turning now to the Bill itself by section 2 the agreement is declared to be legally binding upon the parties thereto, i.e., His Majesty and the company ; and the result is that the company are entitled to insist upon the performance of the agreement by the government in as full a manner as the government are entitled to insist upon the performance by the company ; s) that the company have a legal right to contend that the eastern division shall be constructed by and at the expense of the government, in accordance with the paragraphs of the agreement before referred to. Section 8 provides that the eastern division shall be constructed by or for the government. Section 9 provides that the construction shall be under the charge and control of three commissioners, to be appointed by the Governor in Council. These commissioners, therefore, merely represent the government, so far as their duties are concerned. This is further evidenced by section 13 of the Bill,which authorizes the commissioners to enter upon and take possession of lands, the latter Mr. OSLER. part of the section declaring that such lands shall thereupon be vested in the Crown. Section 18 authorizes the commissioners to let the work of constructing the said eastern division ; but the proviso in that section declares that no contract involving an expenditure of $10,000 or upwards shall be concluded by the said commissioners until it has been sanctioned by the Governor in Council ; and section 21 enacts that the Governor in Council shall have the power at any time to suspend the progress of work upon said eastern division until the then next session of parliament. My conclusion therefore is that the eastern division is to be constructed by the government, and that the company could successfully contend that whether the road is constructed by commissioners representing the government or by contractors, to whom the contracts are let by the commissioners or Governor in Council, it is still, so far as the company are concerned, a road constructed by the government and that, therefore, the company are not obliged to take into account In the ' cost of construction ' customs duties which would add to the cost of materials or supplies for use in the road, even if these materials or supplies are imported by a representative or delegate of the government. In other words, the government having undertaken to construct this section cannot add to the cost of construction by having a representative or delegate perform the work and by then charging such representative or delegate customs duties ; the 3 per cent Would, therefore, only be on the cost of construction, less customs duties. The second question is, what security under the contract has the government against the Grand Trunk Pacific or Grand Trunk, in case at any time the Grand Trunk Pacific or Grand Trunk refuse to operate the eastern division, or to pay the 3 per cent interest ? In answer to this, the only security provided by the agreement is contained in paragraph 35, sub-clause (c), which is a second mortgage upon $5,000,000 of rolling stock, which is to be ear-marked for the use of the eastern division, that is to say, this is the only special security that the government have in case of default ; of course, the government would outside of this have their rights as an ordinary creditor, subject to all other preference claims. Yours faithfully


J. F. HELLMUTH.


That clearly confirms the opinion which I formed on reading the contract. I submitted the same questions to Donald Macmaster, K.C. I tried to get opinions from one or two lawyers who were government supporters; but I found that every man of prominence had been retained by the government or the Grand Trunk. So I was forced to take the opinions of men who are Conservatives; but, notwithstanding that fact


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The MINISTER OF JUSTICE.

Who are the gentlemen of prominence to whom my hon. friend refers who are retained by the government ?

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September 15, 1903