February 11, 1927

LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Not only is there no

organized objection to the scheme, but I can recollect receiving only one individual protest. I may say that ninety-two per cent of the total holders of bonds have assented,

and if we allow for those who more or less disappear in one way or another and cannot be reached, I think we can pretty well take it for granted that all those interested have accepted the scheme of arrangement.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

In answer

to a question asked by an hon. gentleman to my right a moment ago, the minister intimated to the House that for ten years the government would retire the bonds on tender to the amount of the sinking fund accumulated irrespective of the value of the bonds. Any stockholder could send in an offer to sell his bonds?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Yes.

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UFA

Edward Joseph Garland

United Farmers of Alberta

Mr. GARLAND (Bow River):

What is to prevent a large number of the stockholders or all of them getting together and agreeing on a fixed amount per share, in other words, holding up the government?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

There is no compulsion under the scheme of arrangement for the sinking fund trustees to buy the bonds offered, and the danger that my hon. friend refers to in any case is remote when we bear in mind that there sure about seven thousand individual bondholders. I do not think there is likely to be any danger along that line. I do not know how we could guard ourselves against it even if there were such danger.

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UFA
LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

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CON

Peter McGibbon

Conservative (1867-1942)

Mr. McGIBBON:

W hat was the price of

the bonds when the Grand Trunk Pacific went into receivership?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

I am sorry I have not

that information.

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CON

Peter McGibbon

Conservative (1867-1942)

Mr. McGIBBON:

Could the minister tell the committee the total percentage of interest that has been paid upon those bonds since 'that date?

214 COMMONS

Grand Trunk Pacific Ry. Co.

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

About that; and we would be paying two per cent interest.

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Section agreed to. On section 3-Scheme to be operative upon passing of this Act.


?

Charles Stephen Booth

Mr. WOODSWORTH:

For the benefit of

those of us who have had no legal training I hope the minister will explain bow this arrangement can be forced upon individual bondholders. It looks to me like the confiscation of their existing bonds and the substitution of something else whether the individual bondholder may be agreeable or not. I understood the minister to say yesterday that this was not a matter of charity or of a compassionate allowance; he stated that these individuals had a legal claim. Well, if they have a legal claim, how can that claim be superseded in the way here proposed? If one individual bondholder undertakes to stand out, how can he be forced to come into the scheme? And if he can be forced into the scheme, then it is worth considering whether or not we are right in proceeding with the arrangement. If there is nothing legally binding on us in this regard it seems to me that the other question which was discussed yesterday must come up again. These people gave bonds for a concern that proved bankrupt and the Dominion came to the resuce and stood behind the railway. Now it appears that we are to honour all the claims that exist in regard to this unsuccessful railway. Why should we do so if we are under no legal obligation? These are questions that should be clearly explained before we adopt this legislation. We were told yesterday of one instance in which one party signed the contract while the other declined to do so. It seems to me that in this case the Dominion is signing. How shall we force the other people to sign if they do not want to do so?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

My bon. friend's premise regarding the situation of the company in relation to the government is scarcely cor-

rect. I said yesterday, and I repeat it to-day, that these people hold in their hand an absolute security having behind it terms enforceable in the courts of the country against first, the Grand Trunk Pacific which, as my hon. friend says, is a bankrupt concern in receivership. I have the unpleasant privilege of being the receiver for the Grand Trunk Pacific. The Grand Trunk Railway, however, cannot be placed in the same class at all, and in the bonds held by these people there is a provision of guarantee by the Grand Trunk Railway Company of Canada. Now the Grand Trunk Railway has other legal obligations ranking prior to this one, and if in any year the Grand Trunk Railway earns more than sufficient to pay those prior obligations and has any money over, then these people have a legal claim against the former Grand Trunk Railway for their four per cent interest.

As to the other point dealing with minorities who do not assent, I remarked a little while ago that we had had the assent of ninety-two per cent of the bondholders. I am told that it is unique that there should be such a large proportion of assent in connection with an arrangement of this kind.

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LIB-PRO

John Livingstone Brown

Liberal Progressive

Mr. BROWN:

Is that a binding assent?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

Absolutely binding; it is

a signed assent. Now there must always be some machinery for clearing up matters of this kind, otherwise business could not be conducted. That is recognized in our Exchequer Court Act and in the Railway Act, whereby provisions are made generally to deal with the liquidation of bonds of railway companies. The Railway Act provides that the Exchequer Court may give permission to bind what my hon. friend refers to as a minority in case seventy-five per cent of the whole consent. And in view of the fact that in this case we had already in hand a ninety-two per cent approval we thought it unnecessary to involve the legal machinery of the Exchequer court which, as I have said, is authorized under our existing laws to bind the others in the event of seventy-five per cent consenting. That is the best answer I can give my hon. friend. If there were not some means of cleaning up the tag ends no bond issue could ever be dealt with because there is always a proportion of bonds which simply cannot be located. Bonds vanish, they go out of existence, they are burnt up in fires or they go down with ships. As a matter of fact I am of opinion that with such a large percentage agreeing we may say that practically all the existing bondholders have given their consent.

Grand Trunk Pacific Ry. Co.

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?

Charles Stephen Booth

Mr. WOODSWORTH:

Under this procedure no legal action can be taken by the eight per cent against the government. Is that right?

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LIB

Charles Avery Dunning (Minister of Railways and Canals)

Liberal

Mr. DUNNING:

That is correct.

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PRO

Archibald M. Carmichael

Progressive

Mr. CARMICHAEL:

I am not perfectly

clear in regard to the interpretation of the percentages. Section 3 provides:

The scheme of arrangement having already been assented to in writing by the holders of three-fourths in value of the Pacific stock-

That is altogether different from saying, "three-fourths of the holders of the stock". The minister says that ninety-two per cent of approximately seven thousand bondholders have given assent. Does he mean the holders of ninety-two per cent of the stock or ninety-two per cent of the holders of the stock?

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February 11, 1927