February 5, 1937

CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

That is the question I was about to raise.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I am not very sure as to whether that is desirable, but having regard to the fact that this is a guarantee by public funds should we not be in the position of taking security after default in all cases where security is available? That is the argument. On the other side of the question the difficulty is that in connection with these small loans it is quite possible for a borrower to be in default just a short time, two weeks, three weeks, a month, involving only one or two instalments, and) it would seem to me to be opening the door very wide to put every lending institution in the position of hounding such a man immediately for additional security. Perhaps the committee would express some view on that.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I was going to point out to the minister that there may be a great deal of difficulty in connection with the default on one of these loans if no time is fixed within which you propose to mark the beginning of the obligation to pay. Far be it from me to say anything in behalf of the lending institutions; they will be quite capable of looking after themselves in making the agreements. But if default has occurred, we will say, on the first or second instalment on a $1,000 loan, and they ask for payment as soon, as the default arises, it does seem to me that the guarantor, in the absence of any agreement to the contrary, would have to pay, 'because they are not bound1 to exhaust their remedies against the creditor, as we have said. But the lending institutions will not be willing to wait for eight or ten months more at a discount rate of 3i per cent. They will desire to be reimbursed as far as possible, at least to lhe extent of fifteen per cent of their loan, or to follow the course of collecting from their debtor, unless we do something to mark the beginning of the obligation to pay.

Home Improvement Loans

I do not see how we can get along with this loose-and I must call it an extremely loose -way of expressing it. I do not wish to be critical, but I believe the minister made it clear the other day that he was endeavouring to use terms general enough to permit of every case falling within it, because this is a measure not only to provide employment but to improve homes. I agree with that, but it seems to me that the terms cannot be so general as to leave them open on the one hand to abuse or on the other hand1 to fault finding on the part of the lending institution, which would place the unfortunate creditor in the position just now mentioned by the minister, namely that of being hounded to death. It seems to me the observations of the hon. member for Rosthern (Mr. Tucker) as to whether we should use the word "taken" or "required" would apply to the question of the taking of security, to which the minister has just referred. One means the act of the lending institution; it is a discretionary right. The other is a prohibition. That is the difference between the two. When we say "shall be required" we mean that they shall not ask him for security; but if he volunteers to give it, because of the general attitude of mind of the bank manager or the lending institution manager, that is the end of it- if he gives it. But if we say it "shall not be taken," then you have a positive enactment against it. On the other hand, the point the minister has just made, and concerning which he said he wished the opinion of the committee, is the one which arises there. We say they shall not take security, and they do not take security. There is default in the first payment, and then they say, " We want security for this loan, or we will sue."

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

That is my difficulty.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Of course it is. And

it is not imaginary; it is a very real one.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Absolutely.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Moreover I do not think there is power under section 8 to make regulations to meet the situation. The first part of the statement of the Department of Justice was almost identical with the words I used the other day. I can put it this way to the minister: I do not conceive that it is possible for the department to provide regulations to meet these cases, unless section 8 is broad enough in conferring power upon them to do so. I cannot believe that as it reads now it has any power to deal with those things, which look very small, to which I have referred. For instance, why is it the government never likes to take bonds for

(Mr. Bennett.]

contracts? Because in almost every case there is a lawsuit as to what the bonds mean, and as to whether or not a man has done everything he should under it. We find cases going to the courts, and they say, "You did not advise us; you did not do thus and so; you did not enforce your remedy"-

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

In other words, did not read the small print.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes; and our supreme court has said that in this day it must be taken that every man reads the contract he signs. My point is that section 8 is not broad enough to cover the various phases of the situation to which reference has been made.

As to section 6 there are only two points I wish to mention, one of which has already been dealt with by the hon. member for Rosthern. However, there is paragraph (e), which reads: "no service or insurance charges shall be made," and so on. I should like to go further and say: "no service, insurance or other charges of any kind shall be made." It would then read:

No service, insurance or other charges of any kind shall be made by an approved lending institution and as long as the borrower is not in default no other additional charges of any kind shall be made.

The alteration would put the first part of the section on the same basis as the second part, because in the second part we find the expression "as long as the borrower is not in default no other additional charges of any kind shall be made." The first part covers what I conceive to be the initial charge, and I believe it should read "no service, insurance or other charges of any kind."

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

"Or other charges of any kind"?

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

I suggest that wording. I do not say that those should be the exact words, but I should like to have it made abundantly clear that in no case can the borrower be called upon to pay more than the government have arranged the lending institution should be paid. But that does not cover the case after his default-the point to which the minister has directed attention.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Would the inclusion of the words "no service, insurance or other charges" cover the point?

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes. I do not wish in any sense to undertake to suggest how the section should be drafted. In fact I am careful not to do that because if I did, it would immediately be voted down. All I desire to suggest is that the last words would seem

Home Improvement Loans

to cover the point. I do not believe the section as it now reads is quite wide enough.

I take it the words "no service or insurance charges shall be made by an approved lending institution" refer to the initial payment that is made when a person goes to get the money.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Yes, that is what it means. Then the paragraph goes on to say, "and as long as the borrower is not in default no other additional charges of any kind shall be made." These words contemplate, I should think, that when he is in default other charges may be made.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Yes, exactly.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

It should be made clear that when the money is borrowed in the first instance a person cannot be charged more than is provided in the measure. I think the minister should consider that. I confess I do not know what the attitude of a lending institution may be, but as it reads to-day it certainly is an invitation-or shall I go further and say it is an intimation that the lending institution will charge more when there is default.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Of course my right hon. friend will see immediately that when the loan is based upon a fixed rate of discount a charge after default is quite fair. In fact any other procedure would be distinctly unfair.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Quite.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink
LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

Because the individual would have the use of the money, without charge, after default, having paid his discount in the first instance. The regulation at present provides for a maximum rate of interest on default not exceeding seven per cent simple interest.

Having regard to the constructive suggestions which have been made, and which I appreciate, could we arrange to get along with the bill as far as possible in committee, and then keep it in committee while I go over with the officers of the Department of Justice the various points which have been raised? Everyone is cooperating to make this a reasonably good piece of legislation, and while it is important to have it passed as soon as possible the rush is not so great that we cannot afford to take time to have it done properly. If we could agree to have the sections passed in committee we could leave the bill at that stage in order that the Department of Justice may give further consideration to the suggestions on points which have been

discussed this afternoon, and which have come from various members of the committee.

Topic:   HOME IMPROVEMENT LOANS
Subtopic:   PROVISION TO ENCOURAGE REPAIR OF RURAL AND URBAN DWELLINGS
Permalink

February 5, 1937