objection to make it six times; indeed we advised that. In the case of many other companies there is no limit. It is purely a question of practical demonstration, but we could not re-open it in the committee. I understood there was fair unanimity with regard to the proposition to make it six times, and the government offers no objection to that if it is desired.
before the committee a good deal of dbjeotion was taken to the provision in the bill as first introduced for increasing the borrowing power to eight times the capital. The committee discussed this matter very thoroughly and arrived at a compromise decision to allow the company to increase the borrowing
Loan Companies Act
power from four times to five times. I would like to point out that, with the exception of one company, none of the other companies have come anywhere near using the privilege they now have, which is a borrowing power to the extent of four times the paid-up capital.
I think we should leave the figure at five, because we must remember these companies can increase their borrowing power by increasing their capital stock, and it appeared to the committee that five times would be quite sufficient.
correctly, in the committtee there was an amendment moved to increase it to six times. The trouble in committee as I recall it was this: several of the members of the committee wished to have it eight times and some did not wish to have the figure as high as six times. In the first place a vote was taken on the proposition to fix the figure at six; those wishing to have it placed at eight, and those wishing to have it fixed at less than six all voted against the amendment, another amendment could not 'be moved and the amendment to have it placed at five was carried. I believe that had it been possible at first to vote on the question as to whether the committee would allow eight times, that motion would have been defeated, and a motion to have it placed at six would have carried-. I agree with the leader of the opposition that it should be six.
member for Moose Jaw is quite correct. I believe I was the member who moved the amendment that five be substituted for eight. The first amendment proposing to substitute six for eight was the one that most of us favoured. That was voted down and the other amendment, making it five, was carried. I think six would be more acceptable to the loan companies than five, and I recall that the Finance minister in our committee said that either six or five in place of eight, would be quite acceptable to him. So that as the one who moved the amendment to insert "five" instead of "eight", I may say that it would ibe acceptable to me to substitute "six" for "five",
record my objection to this clause on the ground that it is ultra vires of the parliament of Canada. A most respectful request has
been addressed to the government to have this question determined before the bill becomes law, and I think the request should be granted. As expressed by the resolution supported by the premiers of all the provinces when they recently met, they are united in the view that this provision is within the purview of the provinces. Its. enactment therefore will precipitate litigation, the result of which, following oases of an analogous character that have already been determined by the courts, must be against the clause. I am unwilling to assist in the passing of laws that subsequently may be found to be ultra vires of this parliament, and as the point in doubt could be cleared up in a short time, I think the clause should be submitted to the Supreme court.
wish to register my position in regard to this bill. I stated it clearly in the committee, and I will state it now in this House. In my view the vesting in the Department of Finance of the annual licensing of loan and mortgage companies, with power for the same department to cancel those licenses, places upon it and upon the government responsibility for preserving the solvency of such companies incorporated under Dominion statute, and makes the department the guardian of the interests of all the creditors of those companies. This policy in this as in many other cases will, I have no doubt, lead in the future to repeated applications to parliament for reimbursement of losses upon insolvency. I am entirely opposed to such a policy. I have discussed it at length in the committee, and I wish now simply to register my objection to it.
Preamble agreed to.
Bill reported, read the third time and
WINDING-UP ACT AMENDMENT Hon. J. A. ROBB (Minister of Finance) moved that the House go into committee on Bill No. 51 to amend the Winding-up Act.
Motion agreed to and the House went into committee, Mr. Johnston in the chair.
On section 1-Subject to Part III.
Winding-up Act a sort of preference is given to policyholders residing in Canada. This bill places all policyholders, whether living in Canada or elsewhere, in the same position when a company is wound up.
Mr. Chairman, I wish simply to state my objection also to this bill. It purports to take from the courts the power of declaring when a company is insolvent. Under the Winding-up Act the insolvency of a company is always a matter for judicial decision, and, before that decision is given, all parties in interest are afforded an opportunity to be heard in a judicial proceeding, whereupon judgment is given as to whether it has been clearly shown that the company is insolvent and should be wound up. This bill, together with the Insurance Act of 1917, makes it impossible for a company to carry on business except under an annual license from the department. I think that is a wrong departure, and that it is very likely ultra vires of this parliament to enact such provisions. As to whether the act of 1917 in that respect is within the powers of the parliament of Canada to enact should be judicially determined at the earliest possible date. At the present time there is a majority decision of the highest appellate court of Ontario declaring that similar licensing provisions are ultra vires. But the second point is this. When an official of the Department of Finance has declared that in his opinion the license of the company should not be renewed, the fact of the official's refusal to renew the license is taken as evidence, complete and final, that the company is insolvent. In such a case it no longer remains a matter for judicial decision as to whether the company is or is not insolvent; it is in fact decided to be insolvent by an official of the department who is utterly unqualified to exercise such a discretion, and who has not the judicial experience necessary to enable him to decide the question. I admit at once that this matter has passed the standing committee, but I regard it as most pernicious legislation in this respect. I think it is far better that the decision as to whether a company is solvent or insolvent should be
left entirely to the courts; it should not depend upon a discretionary decision, as to the renewal of the license, to be given by an official of the department who, as I say, is without experience, or to be given by any political agency such as the government of the country or any department thereof.
Section agreed to.
Bill reported, read the third time and passed.
TRUST COMPANIES ACT, 1914, AMENDMENT
Hon. J. A. ROBB (Minister of Finance) moved that the House go into committee on Bill No. 52, to amend the Trust Companies Act, 1914.
Motion agreed to and the House went into committee, Mr. Johnston in the chair.
On .section 1-License must be obtained.
objection to this bill as I raised in connection with -the previous one. I regard i-t as the most pernicious legislation that could possibly be placed on the statute book, to provide that the life of insurance companies, loan and mortgage companies and trust companies should be continued from year to year subject to an annual license to be granted by the minister or by any permanent official of the Department of Finance. In order to carry on the class of business which these companies do carry on it is absolutely necessary that they should make provision not for one year but for many years, and this attempt to bring these companies under political control, by providing that after they are incorporated by statute of this parliament their continued existence shall be in the control of political heads of political departments, is most pernicious. It is on its face obviously an attempt to bring the entire financial operations of financial companies throughout the length and breadth of the country under the control of a department of the government. That, I repeat, is pernicious and it will be found to be so. It promises so many evil results that I take a longer time than I otherwise would to point out some of these evils in detail. Let me mention one of -them. As in the case of the claims of the Farmers bank and the Home bank, this bill makes the minister the guardian of the interests of the creditors of all the trust companies incorporated by the Dominion of (Canada. That guardianship cannot be carefully and efficiently exercised by any officials whom that department now has in its employ, and if by their negligence or their inefficiency, if through any default
Agricultural Economic Poisons
of theirs, conscious or unconscious, these companies become insolvent, the creditors of such companies will have an even stronger claim for reimbursement from the treasury of Canada than had the depositors of the Home bank. This legislation is simply piling up trouble for the future and creating, against the treasury of the country, a vast number of claims for reimbursement from -the treasury for which precedents have already been established. Having stated that, I have nothing further to say except to register a general objection to the bill.