Proceedings of the Standing Senate Committee on
National Finance
Issue No. 23 - Evidence - December 12, 2016
OTTAWA, Monday, December 12, 2016
The Standing Senate Committee on National Finance, to which was referred Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures, met this day at 3:02 p.m. to study this bill and proceed with a clause-by-clause consideration.
Senator Larry W. Smith (Chair) in the chair.
[Translation]
The Chair: Dear colleagues, good afternoon on this day when we have all, I hope, been able to get some exercise shovelling snow. I can tell you that, in the small town of Hudson, I had the opportunity to spend two hours shovelling snow; fortunately, I do not have any injuries leftover from my football career that could have acted up.
[English]
Everything hurts.
Welcome to the Standing Senate Committee on National Finance. Colleagues and members of the viewing public, the mandate of this committee is to examine matters relating to federal estimates generally, as well as government finance.
My name is Larry Smith, a senator from Quebec, and I chair the committee. Let me introduce briefly the other members of the committee.
[Translation]
To my left is Senator George Baker; beside him are Senator André Pratte and a new member, Senator Raymonde Saint-Germain. Welcome.
To my right is the leader of the Conservative caucus, Senator Claude Carignan, who is replacing Senator Richard Neufeld. To his right is Senator Elizabeth Marshall of Newfoundland and Labrador, and to her right is Senator Nicole Eaton from Ontario.
[English]
From the beautiful province of Saskatchewan, dressed in green — no, I'm sorry — Senator Raynell Andreychuk. That's an inside joke.
[Translation]
For those who do not follow football, people from Saskatchewan always wear green.
[English]
Today, we start our consideration of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures. Until now, we were studying the subject matter of Bill C-29, but the actual bill was referred to this committee last Thursday, December 8.
[Translation]
We have with us today representatives from the Barreau du Québec, who will provide us with their comments on the provisions of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures. These representatives are Luc Thibaudeau, Chair of the Committee on Consumer Protection, Yves Lauzon, a member of the Committee on Consumer Protection, and Réa Hawi, Committee Secretary and Counsel of the Research and Legislation Unit.
Welcome to the three of you. I understand that you have an opening statement, which we will follow with a question period.
Go ahead, Ms. Hawi.
Réa Hawi, Committee Secretary and Counsel, Research and Legislation Unit, Barreau du Québec: Thank you, Mr. Chair and honourable senators.
As you mentioned, my name is Réa Hawi. I am counsel in the Research and Legislation Unit for the Barreau du Québec, and I am also the secretary of the Committee on Consumer Protection.
The Barreau Committee on Consumer Protection is made up of lawyers who have recognized expertise in consumer law. Its members include both lawyers who represent merchants and lawyers who represent consumers, and this gives a broad and balanced view.
I am accompanied by the chair of the committee, Luc Thibaudeau, who represents a clientele of corporations and financial institutions, and a member of the committee, Yves Lauzon, who represents consumers.
The mission of the Barreau du Québec is to protect the public, and it is from that perspective that we are speaking about Bill C-29. This bill raises complex questions and important issues. We are asking for the opportunity to reflect fully on it in the interest of consumers. I will turn things over to Mr. Thibaudeau, who will explain the Barreau du Québec's position in more detail.
Luc Thibaudeau, Chair of the Committee on Consumer Protection, Barreau du Québec: Thank you.
Good afternoon, honourable senators. It can never be repeated enough that the mission of the Barreau du Québec is to protect the interests of the public. This protection is at three levels: first, before the law; second, in the courts; and third, in the process of enacting legislation. These three elements are linked to the study of Bill C-29, and they fully justify the presence of the Barreau du Québec today.
It has long been recognized that consumer protection legislation addresses matters of public policy. The reason is simple, and it is obvious when it comes to Bill C-29, since it will affect all Canadians.
The 2012 Supreme Court decision in Richard v. Time Inc. quotes an Ontario judge at paragraph 43. He provides a reminder that consumer protection legislation is the expression of a social purpose, which is the establishment of more ethical trade practices calculated to afford greater protection to the consuming public. For that reason, when measures are proposed in this respect — and I am in a good position to know — provincial governments customarily consult the population to obtain comments and views of the parties involved.
In addition, it is not uncommon for these consultations to be carried out to get the views of the parties on orientations, orientation projects, lines of thought, even before a bill is introduced. It is the very nature of the consumer law legislation to question public opinion, and so democracy asserts itself as an institution.
This consultation process is completely circumvented by the hasty passage of clause 5 of Bill C-29, and the rights of all Canadians are affected by this clause.
There has been a lot of talk in the media in recent days about the weakening of consumer rights. Many have spoken out against Bill C-29, arguing that the provisions in it would diminish the rights of consumers. In fact, the bill raises several questions, particularly for Quebec, about the future application of the Consumer Protection Act to the various types of contracts offered by banking institutions and on their trade practices. It is the new section 627.03, which sets out the purpose of the Bank Act, that is the source of these questions. In that provision, Part 12.2 of the Bank Act would read as follows, and I quote:
. . . a comprehensive and exclusive regime to banks' dealings with their customers and the public regarding banking products and services . . .
Under the proposed new provisions, this regime would take precedence over any consumer protection law; it is the second paragraph of section 627.03. The principle of federal paramountcy is a constitutional principle governed by the courts and not by the law or the legislator. It is a principle set out in the Constitution Act, 1867.
This issue of exclusive banking regime has recently been considered by the Supreme Court. In 2014, in Marcotte, the court ruled that the basic provincial jurisdiction over contracts will always apply insofar as it does not prevent the achievement of the purpose of the Bank Act. The Supreme Court stated in paragraph 79 that the federal regime will always be subject to the fundamental provincial rules of contract. In paragraph 80, it states that the federal purpose of establishing exclusive standards, if such a purpose could be made out, is not diminished by the application of provincial legislation. Let me point out that in the decision of the Supreme Court, the passage "assuming, without deciding, that such a purpose could be made out'' is bracketed. As the court pointed out in paragraph 78, and I quote:
However, even if we assume that a purpose of the Bank Act is to provide for exclusive national standards, such a purpose would not be frustrated by ss. 12 and 272.
Therefore, the exclusivity that is so much sought by clause 5 of the bill is challenged when these excerpts are considered. It is understandable why public opinion is not in favour of the bill. These aspects cannot be ignored. However, it is not for us to decide the impact of this provision that sets out this exclusivity. The courts have the power to do that. According to the Barreau du Québec, our government must avoid another legal saga, and it would benefit much more from conducting a public and inter-legislative consultation focused on harmonization and not on confrontation.
As for the legal uncertainty and the upsurge in litigation, the debate over the application of provincial laws to the banking sector has generated a great deal of debate among judges and in the courts. By introducing clause 5 of the bill, the government may once again face the court system. This debate could not come at a less opportune moment. The judicial system is shaken at the moment by Jordan, and delays are a major issue in civil and criminal matters. The congestion of the courts causes modes of alternative justice to emerge. We have known this in Quebec since the arrival in 2016 of our new Code of Civil Procedure. It is time for dialogue and participation.
The litigants unanimously denounce long and costly litigation. The recently announced investments in judicial administration must be used wisely. At present, justice is negotiating the shift into the 21st century, and the government must do the same by complying with the co-operative and flexible federalism suggested and approved by the courts. In carrying out a public and inter-legislative consultation, the government would indicate that it accepts the principle recognized by the Supreme Court that jurisdiction is shared when it comes to consumer protection, in particular the protection of users of banking products. Harmonization agreements can surely be used as a model to allow legislative systems to move toward a concordance of standards set by both levels of government. Through such consultation, the government could improve its legislative process and avoid the resurgence of litigation and the legal uncertainty that will undoubtedly accompany it.
The Barreau du Québec requests that clause 5 of Part 4 of Bill C-29 be removed to give the government the opportunity to hold a public consultation with the public and stakeholders in order to identify their expectations and the issues relating to the possible introduction of these provisions. Thank you.
The Chair: Thank you, Mr. Thibaudeau. Do any of your colleagues want to make any comments? We have a list of senators who want to ask questions. The floor is yours, Senator Baker.
[English]
Senator Baker: Thank you to the witness for his excellent presentation concerning this matter.
However, I would like to ask two questions of Mr. Lauzon, who is a very experienced attorney. I remember his cases going back to the late 1970s. He is reported in over 100 cases, similar in nature, in consumer affairs.
The first one is, as referenced by Mr. Thibaudeau a moment ago, the Supreme Court of Canada, paragraph 66, Marcotte. You were also the attorney in Marcotte and the Desjardins decision, two of the three cases that were decided.
At paragraph 66 of Marcotte, it says this:
Although the s. 12 disclosure obligation and the s. 272 civil remedies relate to bank lending, these provisions do not in any way impair any activities that are "vital or essential to banking'' such that Parliament might be forced to specifically legislate to override the provincial law . . . .
It almost seems as if the Supreme Court of Canada is saying that there's no need to be overriding provincial law, and they could not see any reason why the federal government would go down that path.
Is that your interpretation of that? That's my first question.
[Translation]
Yves Lauzon, Member of the Committee on Consumer Protection, Barreau du Québec: This aspect of the Marcotte decision contains a number of details but, basically, what the court said, as my colleague pointed out, is that consumer protection is a shared jurisdiction: the provinces are responsible for the contractual side, and the federal government is responsible if there are aspects that are key to its mission. In this passage, even if the banks claim that action should be taken or if it encroaches, the court says no. If I have read the passage you are referring to properly, the court does not ask to legislate; it says that provincial jurisdiction coexists with federal jurisdiction. Even though the provincial jurisdiction governs a contract with a federal institution, the Consumer Protection Act deals with the civil aspect of the contract. For instance, provincial legislation cannot encroach on the federal government's concept of interest, but provincial legislation may stipulate that a contract between a bank and a consumer requires the disclosure of all fees in advance. Have I answered your question?
[English]
Senator Baker: I better get to my second question, because the chair will cut me off in a minute.
In paragraph 82 of the Marcotte decision, the Supreme Court of Canada said:
Sections 16 and 988 of the Bank Act provide that a contract is not invalid solely by reason of being contrary to a provision of the Act. The Bank Act instead provides for criminal sanctions against banks that breach their disclosure obligations. This, say the Banks, evinces a federal intention to preserve banks' contracts and to provide for criminal sanctions instead of civil remedies such as punitive damages against banks that breach their disclosure obligations.
Paragraph 84 says this:
There are many provincial laws providing for a variety of civil causes of action that can potentially be raised against banks. The silence of the Bank Act on civil remedies cannot be taken to mean that civil remedies are inconsistent with the Bank Act . . . .
Is what we're seeing here a clamping down on civil remedies? Is this what we're seeing here, that a citizen of Canada may not be able to seek a civil remedy in the future, and it would then come under the umbrella of the Bank Act that says that you or I or anybody else, any citizen, can't sue, can't receive punitive damages as you can in the province of Quebec? Is that what this is all about here with this federal declaration?
[Translation]
Mr. Lauzon: That is exactly what a lawyer, who wants to interpret this legislation for the benefit of a bank, could plead. Would he be successful? I do not know. But your question illustrates all the potentially unnecessary conflict.
The first proposal that you pointed out indicates that the two regimes can co-exist and that the province can exercise its contractual jurisdiction to rebalance the concept of free consent and of information on consumer contracts. The banks may also have specific provisions. Although there are conflicts between the two, it is normal for provincial jurisdiction to be recognized because it may be more advantageous, given the exclusive jurisdiction; the provision is exclusively contractual.
Even if there is conflict, the paramountcy cannot be applied unless the conflict is such that it compromises the core of banking activity. Take Marcotte, for example. A bank's obligation in a contract is to disclose all fees in advance, including currency conversion fees, is a contractual civil aspect that needs rebalancing. This does not in any way compromise the profitability or jurisdiction of banks in the field of credit cards. The example my colleague pointed out is a fine one.
The position of the Barreau du Québec is that we have a regime that can co-exist with the federal regime. Yet, this bill does not create a potential conflict just with the Consumer Protection Act. We are talking about all consumer protection regimes, including the Civil Code of Quebec, all common law jurisprudence and every provision of consumer protection legislation in every province in Canada. The 13 legislative jurisdictions of 1992 have consumer protection provisions and regimes, including the civil code or common law, in which we try to harmonize the traditional civil code to the consumer's advantage. The Supreme Court confirmed in Time that the information imbalance requires better protection, for obvious reasons. However, it in no way compromises the profitability of federal businesses, as in this case.
We think the potential conflict that the Barreau is pointing out will definitely clash unnecessarily. Perhaps in 10 years, the Supreme Court will reaffirm what it has just said. The Supreme Court has applied one of the principles of modern interpretation, which is co-operative federalism. This must be reflected in the respect for the coexistence of shared jurisdictions, based on particular jurisdictions.
Allow me to give you one last example. In Marcotte, if there had been a regime that was in contravention of the Consumer Protection Act and there had been a consumer contract with a bank, and if one of the banks had had an arbitration clause that invited complainants who had a dispute to go to arbitration and that there were no class actions, would Mr. Marcotte alone have obtained the outcome he did? It would have been impossible.
What will be the practical consequences, beyond the constitutional debates and the subtleties of jurisdiction sharing? Who will lose? Anyone who has a credit card or deals with banks that are entitled to a provincial regime that may be more advantageous.
This does not prevent the federal government or the banks from applying certain minimum standards. However, preponderance should not be sought. We must not create conflicting legislation in its essence and try to level it down, saying that everyone will be governed by a single model that will be much less advantageous. It is contrary to all legislative policy that the Supreme Court asks legislators to follow.
The Chair: Five senators want to ask questions. The representatives of the Barreau du Québec are with us until 4:00 p.m., then we will move on to other items on the agenda.
Senator Pratte: My question follows on the issues you raise, but in a more specific way. I share the federal government's goal of ensuring that all consumers of banking services have basic protection and that it is country-wide. The status quo in this regard may not be enough, at least that is the Government of Canada's assessment of it.
How do we reconcile the two, meaning the perceived need of the Government of Canada to create a basic regime, and at the same time ensure that the provincial protection regime is maintained in the provinces where it is better? Is there a way to achieve both goals? In other words, if we went back to square one, assuming that Bill C-29 did not exist, and we were trying to rewrite a bill, assuming that we are not satisfied with the status quo, how could we reconcile the two?
Mr. Lauzon: I like your question. It is important because it is true that the regimes across Canada are not the same. I think the answer is this: sharing between a national standard applied to banks and more generous provincial legislation that does not enter into conflict, so that both can be applied in parallel. I think that is the answer.
As for the need to create a basic regime, virtually all of the provisions in Bill C-29 already exist almost everywhere, as far as banks are concerned. There are few changes. We do not want to change the national standard significantly.
To answer your question more precisely, I want to tell you that we can simply apply the Constitution and remove the contrary clauses. It is recognized that a legislator cannot change the Constitution. The issue of paramountcy or exclusive jurisdiction cannot be governed by a law. Whether we remove the quasi-constitutional provisions that have no place and we remove the notion that there can be no co-existence, it is enough to establish the national regime for banking relations. If, in a province, a litigant has a more favourable remedy under this standard, he or she may exercise it. However, another provincial regime that is more advantageous can very well be exercised without conflict. That is the spirit of the Marcotte decision, which is a commendable goal. It is commendable that consumers across Canada have a minimum of protection. However, the minimum does not exclude more.
Mr. Thibaudeau: May I add to my distinguished colleague's answer?
Senator Pratte: Yes, go ahead.
Mr. Thibaudeau: Once again, referring to the Marcotte decision and paragraph 84 quoted by Senator Baker, it says, and I think this is where the focus of your question is:
As this Court stated in Canadian Western Bank, at para. 24: ". . . constitutional doctrine must facilitate, not undermine what this Court has called 'co-operative federalism'''. We conclude that ss. 12 and 272 of the CPA are not inconsistent with ss. 16 and 988 of the Bank Act . . .
With respect to clause 627.03 of the bill, the answer to your question would be to replace paragraph (a) with the following: "to provide clients and the public with minimum protection at the national level.'' Once this minimum protection has been established, nothing would prevent provincial legislatures from exercising their jurisdiction in a field of jurisdiction assigned to them.
Senator Carignan: I would simply like to make a small aside. People may not know this, but Mr. Lauzon is a prominent authority in Quebec law. He is one of the top jurists in Quebec. It is truly an honour to have you here, Mr. Lauzon.
Mr. Lauzon: We are very happy in our neck of the woods to have someone from the Lower Laurentians as the Leader of the Opposition in the Senate because we are from the same region, from Saint-Eustache and the environs.
Senator Carignan: My question is sort of along the same lines as that of Senator Pratte, and it deals with section 627.96, which sets out a series of cases in which the Governor-in-Council may make regulations. There may be multiple rules that will increase the risk of conflict. Would the federal regulation apply in the context of a conflict as opposed to provincial legislation in exercising this paramountcy, in the context of a contradiction? In my opinion, the legislation would create multiple risks of conflict and complications for consumers. Should we not remove this section and ask the government to review the bill and consult with people in the provinces to avoid these conflicts?
Mr. Thibaudeau: I would say yes. When we are talking about conflicts — and what goes against the barreau's mission, which is to protect the public in the legislative process — it is that we are trying to dismiss civil remedies without the appearance of operational incompatibility. With a provision like subsection 627.03(2) and with the provision that you just mentioned, which gives extensive regulatory authority to the government, there would be a way for Parliament to legislate piecemeal, because there are several provisions of the bill that mention standards, information and intelligence prescribed by regulation.
We do not know at this stage what it is returning to, but without even knowing it, we are immediately disregarding the application of provincial legislation, and not only the Quebec law, but also the Civil Code, common law and all provincial legislation, including the Alberta Fair Trading Act, which is the core jurisdiction of the provinces.
Senator Mockler: I would like to share with you the fact that I had the opportunity in the past 48 hours to work with people from the Atlantic region, specifically people from New Brunswick. That is why my question will be short and simple.
I agree when you say that we should open a dialogue and hold consultations. That is essential in this area to enable all stakeholders to make a decision that will help to further protect consumers.
That said, for the transcriptions of our committee, I would like to share with our witnesses today a three-paragraph letter from Rick Hancox, the Chief Executive Officer of the New Brunswick Financial and Consumer Services Commission.
[English]
He is Chief Executive Officer of the New Brunswick Financial and Consumer Services Commission. If you would permit me, Mr. Chair, I would like to read it to make sure that they know that we had the same concern. It was addressed to me, and it goes like this:
Senator Mockler,
Thank you for sending me the information on Bill C29. We understand that there is a paramountcy clause that would provide for federal legislation overriding any provincial legislation as it relates to consumer protection or business practices as they relate to consumers.
The Financial and Consumer Services Commission is an arm's length, self-funded Crown Corporation in New Brunswick responsible for the regulation of securities, insurance, pensions, credit unions, mortgage brokers, loan and trust companies and a wide range of consumer protection legislation. We had not been consulted on the potential impact this Bill might have on provincial financial services or consequences for consumer protection. As it stands now, it is difficult to assess the impact without a better understanding of the purpose. We would support an opportunity to explore the intent and details with our federal and provincial and territorial colleagues before these provisions come into play. And as with many issues in this arena, the "devil is in the detail''.
I might suggest that an appropriate forum for this discussion is the Federal/Provincial/Territorial Financial Policy Sector Dialogue group. This group is coordinated through the Federal Department of Finance (Financial Sector Policy Branch). It brings together senior staff from the departments of finance and financial services regulators of the provinces and territories with their various federal counterparts to discuss issues affecting the oversight of the financial sector.
Please let me know if we can be of assistance in any way.
[Translation]
The letter is signed Rick Hancox, Chief Executive Officer.
Are our concerns legitimate?
[English]
Mr. Thibaudeau: Again, I can answer that with one word: Yes.
[Translation]
Senator Saint-Germain: My question is for any of you. If Bill C-29 is approved, with the provisions that we have mentioned, a bank's client protection regime will be amended. Mr. Thibaudeau, you spoke earlier about alternative dispute resolution, and in this case we are talking about the bank ombudsman. Do you think that Quebecers — because our consumer protection law is fairly robust — would win in this relationship with their bank by using the bank ombudsman instead of the current regime, which leads to mediation and small claims court in certain disputes?
Mr. Thibaudeau: If someone ends up before small claims court now in Quebec, there is a pilot project in two Quebec districts that addresses mandatory mediation through an accredited mediator, who is a neutral party.
To answer your question, one thing is certain. If, as a result of a judicial decision, it turned out that the appeal to the ombudsman was of a certain exclusive nature, because the provision clearly indicates that it deals with all claims, there would be a loss for the consumer, namely, the possibility to address the Office de la protection du consommateur in Quebec, which is a neutral party. This is how the judicial system becomes involved in Quebec, and indeed elsewhere, and the Supreme Court recognized this in Bhasin v. Hrynew, which is a common law decision.
There is a new form of judicial administration, and mandatory mediation already exists in Ontario and British Columbia. So why would it not exist in Quebec? The provincial legislature has jurisdiction to set out such measures, and I do not see how federal banking jurisdiction could absolve those institutions from this responsibility for the administration of justice.
Mr. Lauzon: To answer your very practical question, if we determined that the consumer should go to the Financial Consumer Agency of Canada, it would mean that the consumer would not be governed by the Consumer Protection Act. We would apply a system of substantive rights where we have far fewer rights.
There are presumptions in the Consumer Protection Act. There are a lot of provisions that are much more specific, and there is jurisprudence. We are losing a much more independent forum with the possibilities of execution or mediation. In particular, we are losing out on the enforcement of rights. For example, if we go to the Financial Consumer Agency of Canada for a case involving collection fees — under provincial legislation, everything must be declared in advance — in federal legislation, the consumer can be asked for very high fees, which are difficult to define, if it involves all the costs reasonably incurred by the institution to enforce the contract. Consumers can end up with accounts that will deter them from turning to the agency.
In addition, it is important to keep in mind that this is a system of decreased substantive rights. If there is nothing better in a province, there is no problem. In response to Senator Pratte's question, it is all the better if a national standard can, in some cases, include advantages, but it should not be a disadvantage at the same time. Keep in mind that class action is not a possibility before an agency. In general, the purpose of consumer legislation is rebalancing, and that is what allows the presumptions, the ease of proof and the class action that can be used if there are good arguments. Who is going to go before a court or an agency for a $50 case if they are going to pay very high legal fees?
We lose in many ways. This is not a theory; it is concrete. Lastly, this is what is presented as a debate.
[English]
Senator Andreychuk: Much of the conversation before was that, in simple but not legal terms, it was to protect the provincial legislation in Quebec, which was higher than the minimal standards set by the federal government proposal.
I come from Saskatchewan, so I had heard the Quebec standard was higher. Perhaps B.C. is also, and it was silent on the other provinces. But if I'm hearing you correctly, your concern is to maintain provincial jurisdiction of that part that you believe is provincial, irrespective of which province. I heard you say in answer to Senator Baker that the judgment was to facilitate, not undermine, the provincial jurisdiction.
So the minimal standard is not that we're giving just the least to the consumers; we're giving a common standard. Then every province has a jurisdiction to set the rules that are appropriate for that province, or as the consumers request. Am I getting that?
It could be Saskatchewan, B.C. or Quebec. We're not comparing. We're saying that if they're intruding into provincial jurisdiction, that's your concern. If they're allowing the province to set its own standard, it's not a question of higher; it's a question of not undermining the jurisdiction of the province.
Mr. Thibaudeau: Correct.
Senator Baker: I have one concluding question because you didn't really will answer my last question, Mr. Lauzon.
I read quotes that said that the Bank Act does not have civil remedies. Provincial legislation has civil remedies — monetary remedies. Since the Bank Act has no civil remedies and if the Bank Act were to be paramount, then there would be no civil remedies.
[Translation]
Mr. Lauzon: I agree. In theory, some remedies may be exercised, but they are fewer in practice. For instance, section 272 does not contain presumptions or options. So we are also impoverishing the system from a remedy perspective.
In reference to Senator Andreychuk's comment, all jurisdictions can be affected. For example, in common law related to consumers, there's jurisprudence known as the "reasonable expectation of the consumer.'' In common law, even without a provision, the theory of reasonable expectation has been developed. In a given situation, when a citizen is dealing with a much stronger institution, the justices will say the citizen was entitled to expect more information. The Civil Code also includes many provisions that provide certain remedies in the case of contracts of adhesion. All these provisions, which can be called remedies or substantive rights, clearly wouldn't exist under a federal system. The Bank Act includes standards that regulate activities in a consistent manner across Canada, based on the aspects under this jurisdiction.
If I'm dealing with the Royal Bank, whether I'm on Prince Edward Island or in British Columbia, I have basically the same protections as part of my relationship with the bank. However, this legitimate desire to establish a consistent minimum standard should not be used to set aside all the provinces' contractual aspects. In any case, the financial institutions don't need to regulate all contractual aspects to carry out their mission.
[English]
Senator Baker: So the reason why you brought the action under the Consumer Protection Act of Quebec — you brought two actions: the Desjardins decision and the Marcotte decision. You were one of the lawyers representing the consumer. There was a group, and you were there for both of them.
The reason why you brought it under the Consumer Protection Act of Quebec was that there was a remedy. There was no remedy under the Bank Act.
[Translation]
Mr. Lauzon: There was a more specific remedy and law, namely, the requirement to state everything. According to the Supreme Court, your banking purpose doesn't exempt you from meeting a province's contractual standards, which say that everything must be disclosed in a consumer contract. There are a number of remedies.
[English]
Mr. Thibaudeau: With all due respect, Senator Baker, you're referring to the principle of paramountcy. This principle was analyzed at length in the Marcotte decision. The paramountcy principle will apply in as much as there is operational incompatibility. The fact that the Bank Act does not provide a civil recourse and that the Consumer Protection Act does provide a civil recourse does not create any kind of incompatibility between the two statutes.
We are very uncomfortable with section 627.03 because it creates a different view of the paramountcy, which is to toss away provincial legislation, whereas there's no conflict of application as of yet, of course. Can we allow it to go piece by piece by way of regulating, as Senator Pratte was mentioning?
The Quebec bar will not issue a ruling on this. It's not the Quebec bar's role or function. The Quebec bar is here to raise the flag and say, "This is where we're going again. We're going to spend thousands of dollars in judiciary contestation,'' whereas we are in the 21st century where discussion must predominate, with exchanges between the different bodies of legislation, to achieve this federalist cooperation that the Supreme Court encourages us to adhere to.
Senator Baker: Without the Consumer Protection Act of Quebec, you could not have sought a civil remedy.
[Translation]
Mr. Lauzon: No, and the same is true for class action lawsuits. The Consumer Protection Act prohibits arbitration clauses that exclude the consumers' right to join together.
The barreau raised the big question we must ask ourselves. As my colleague said, it's not our job to respond. Ultimately, the Supreme Court will need to make a decision. We can easily ask ourselves whether this section of the act is constitutional. We may have an opinion, but we know this question is so important it may end up in court. This would be unnecessary, since we can carry out both missions. We can ensure consumer protection and create an effective, modern and solid banking system.
Also, the barreau has no concerns about banks. As a Canadian citizen, I'm happy that my banking system is envied around the world. It's not like Venezuela's banking system. We have a banking system that makes us proud within the G20. That's excellent. However, the Canadian banking system, which is extremely solid and very strong, can be easily aligned with the Constitution.
The question is the following. Is the bill constitutional? The courts must answer this question. As it stands now, if you read Marcotte, the bill could result in many unnecessary arguments and questions.
Senator Carignan: Ultimately, banks are worried about class action lawsuits. Consumers on their own will drop their requests for $5 or $10. However, the possibility of joining together to pursue class action lawsuits serves as an enormous counterweight for consumers and helps mitigate the power of the banks. Without this necessary counterweight, lawsuits are unrealistic because they're theoretical. Nobody will launch a lawsuit for $5 or $10, except as part of a class action lawsuit.
Mr. Lauzon: That's quite fair. To build on what my colleague was saying, all jurisdictions except one, meaning nine Canadian provinces, have adopted extremely similar legislation for class action lawsuits. There are some different nuances, but the legislation is basically identical in terms of all the major principles and effectiveness.
This confirms the concern highlighted by the Supreme Court in Time. Collective action is recognized for the social functions of access to justice, resource savings and deterrence. The objectives of the Consumer Protection Act are the same. These objectives have now been codified in the new Civil Code, in the preliminary provision. This provision makes the entire code an instrument to promote access to justice, resource savings and proportionality. This national standard exists for consumers through collective actions and consumer protection systems. It can and must co-exist with the national banking standard. This can be done under the Constitution. According to the barreau, in a bill, we don't need to create uncertainty and conflict and inevitable issues that we find unnecessary. Again, judicial resources are limited. Consultation is the solution.
The Chair: If no other senators have any questions, I want to thank our witnesses for being here and for expressing themselves clearly. Thank you for meeting with us on such short notice.
Mr. Lauzon: I want to thank the upper house committee for listening to us and for asking questions. It's worthwhile to speak with you, and we prepared to the best of our ability. Your questions show that you have properly analyzed the issue, and I'm pleased to see this.
[English]
The Chair: Before we start our clause-by-clause consideration, I'd like to make some opening remarks.
Colleagues and members of the viewing public, we are now about to begin going through Bill C-29 clause by clause. Before we do this, I would like to remind senators of a number of points.
I know that all members are very eager to ensure that in this committee we do the best we possibly can so that when the Senate takes up this bill again at third reading, it has before it the best possible product.
If at any point a senator is not clear where we are in the process, please ask for clarification. We should, at all times, have the same understanding of where we are in the process.
In terms of the mechanics of the process, I wish to remind senators that when more than one amendment is to be moved in a clause, the amendments should be proposed in the order of the lines of a clause, meaning that amendments should be proposed following the order of the text to be amended. Therefore, before we take up an amendment in a clause, I will be verifying whether any senators had intended to move an amendment earlier in that clause. If senators do intend to move an earlier amendment, they will be given a chance to do so.
If a senator is opposed to an entire clause, I would remind that, in committee, the proper process is not to move a motion to delete the entire clause, but rather to vote against the clause standing as part of the bill.
I would also remind senators that some amendments that are moved may have consequential effects on other parts of bill. It is very important that the committee remain consistent in its decisions and that they be consistently applied throughout the bill.
In this spirit, it would be very useful to this process if a senator moving an amendment could identify other clauses in this bill where this amendment could have an effect. Otherwise, it could be very difficult for members of the committee to remain consistent in their decision making. Staff will endeavour to keep track of these places where subsequent amendments need to be moved and will draw our attention to them. Because no notice is required to move amendments, there can, of course, have been no preliminary analysis of amendments to establish which ones may be consequent to others and which may be contradictory.
If members ever have questions about the process or the propriety of anything going on, they can raise a point of order. The chair will listen to the argument, decide when there has been sufficient discussion of the matter of order, and make a ruling. The committee is, of course, the ultimate master of its business within the bounds set on it by the Senate, and a ruling can be appealed to the full committee by asking whether the ruling shall be sustained.
As chair, I will do my utmost to ensure that all senators wishing to speak have the opportunity to do so. For this, however, I will depend on your cooperation, and I ask all of you to think of other senators and to keep your remarks to the point and as brief as possible.
Finally, I wish to remind all honourable senators that no seconder is required in committee and that if there is ever any uncertainty as to the results of a voice vote or show of hands, the cleanest route is to request a roll call vote, which provides clear results. Senators are aware that any tied vote negatives the motion in question.
Are there any questions on any of the above? If not, I believe we can proceed.
Senator Marshall: Given the size of the bill, will we do groups of clauses? Is that the intent?
The Chair: If it's agreeable, we'll do it by sections: Part 1, Part 2 and Part 3, et cetera.
Senator Harder: Mr. Chairman, it may be helpful if I clarify, on behalf of the government, one matter, and then the committee can do what it wishes with respect to clause-by-clause consideration.
The Chair: May I just do one little thing first? Just so everybody is clear on who is a member in good standing of the committee and is therefore allowed to move a motion and to vote on any motion, I would ask the clerk to read out loud the membership list as it stands this morning. We are in a fluid situation, as you know, and things are changing.
Would you please read the names of the members of our committee?
Gaëtane Lemay, Clerk of the Committee: Certainly.
The Honourable Senator Smith, the Honourable Senator Andreychuk, the Honourable Senator Ataullahjan, the Honourable Senator Baker, the Honourable Senator Carignan, the Honourable Senator Cools, the Honourable Senator Harder, the Honourable Senator Eaton, the Honourable Senator Marshall, the Honourable Senator Mitchell and the Honourable Senator Pratte.
The Chair: Thank you very much. Senator Mockler should be on that list.
Ms. Lemay: Yes, you're right, and he's not. I'm sorry, senator.
The Chair: We have Senator Moncion.
Ms. Lemay: She's not a member.
The Chair: Would you like to start?
Senator Harder: Yes. I thank you, chair.
Honourable senators, further to the Minister of Finance's public remarks of about an hour ago, I'm here on behalf of the Government of Canada regarding Bill C-29. I can indicate that the government will remove from Bill C-29 and later reintroduce the federal consumer protection framework for banks to ensure the highest level of consumer protection is adopted in the financial sector across Canada.
An Hon. Senator: Hear, hear!
Senator Harder: Therefore, senators, I ask the committee's leave to delete Division 5 of Part 4 of the bill in its entirety; that is, the "Financial Consumer Protection Framework'' section.
Some Hon. Senators: Hear, hear!
The Chair: Are there comments from any of the other members around the table?
Senator Andreychuk: That explains why the minister was not coming back.
Senator Harder: I think it's best to say that this is a very agreeable and prudent way of moving forward, and I thank honourable senators for their conversations over the last number of days.
Senator Baker: Mr. Chairman, I might note that prior to the bill coming to the Senate, it did not receive much attention. But when it came to the Senate, to this particular committee, which you chair so excellently, Mr. Chairman, it received the attention of the Senate — sober second thought. I congratulate the Government of Canada for looking at this again and saying, "Let's have some sober second thought.''
The Chair: Thank you.
Are there any other comments before we proceed?
Senator Mockler: I have a comment, if you would permit me, Mr. Chair.
I'd like to thank Senator Pratte for pinpointing what was happening at the beginning. I'd like to also recognize my leader, Senator Carignan, and to say thank you to the Leader of the Government in the Senator, Senator Harder, for exposing this.
I'm one of those who has always fought for people on Main Street rather than Bay Street, for the record.
Senator Pratte: I want to thank Senator Harder and the government. I think it's a wise decision.
[Translation]
I would certainly prefer that to having a confrontation at the last minute.
[English]
I want to thank all of the senators who supported consumers and provincial rights, including Senator Carignan. I think that without that support, today's announcement would not have been made. So I think consumers won today; provincial rights won.
[Translation]
Vigilance will be required for next time.
[English]
Senator Cools: I have a question. I didn't hear very clearly exactly the proposition before us. Did Senator Harder say that he was going to remove it or delete it?
Senator Harder: Delete section 5 of Part 4 from the bill.
Senator Cools: That would need a motion in this committee. So it will be done by motion; good. Okay.
The Chair: We've having that proposed to us as a preamble to when the actual motion will be taken.
Senator Cools: As long as we understand that it has to happen by motion.
The Chair: Right. Understood.
Senator Cools: That's very interesting because everything else has not proceeded by motion. Perhaps at some point in time in the future we should do these things by motion: "I move that these sections be adopted.'' That's for another day. But it would need a distinct motion.
The Chair: Thank you.
Senator Cools: With a seconder. Thank you.
The Chair: With your permission, I'd like to proceed to clause-by-clause consideration. We will proceed by division.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall clause 1, which contains the short title, stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed.
Is it agreed, with leave, that clauses be grouped according to the four parts of the bill as described in the "Table of Provisions'' of Bill C-29?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall Part 1, entitled "Amendments to the Income Tax Act and Related Legislation,'' which contains clauses 2 to 88, carry?
Some Hon. Senators: Agreed.
An Hon. Senator: On division.
Senator Marshall: I would like to make a point, Mr. Chair. I'm not supportive of clause 44, and I will be speaking to it tomorrow during third reading.
Senator Eaton: I will be doing the same thing.
Senator Ataullahjan: I will do the same thing.
Senator Andreychuk: I shall add my voice also.
The Chair: We have consistency of four members who will talk on clause 44.
So we carried on division, correct?
Senator Andreychuk: Chair, I'm taking over, I think, from Senator Cools. I heard you to say, right at the start, that it is agreed that the committee proceed to clause-by-clause consideration of Bill C-29, a second act to "amend'' certain principles. I think you intended to say "implement,'' and I think we all took it to be that.
The Chair: Did I say "amend''?
Senator Andreychuk: I heard that, but I may be still on the —
The Chair: Just for the minutes —
Senator Andreychuk: It's "implement,'' and we all understand that.
The Chair: Let's make sure, for the minutes and for our viewing public, that we started with "proceed to clause-by-clause consideration of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016, and other measures.
Shall Part 2, entitled "Amendments to the Excise Tax Act (GST/HST Measures) and Other Related Texts,'' which contain clauses 89 to 99, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Carried, on division.
Shall Part 3, entitled "Excise Act, 2001,'' which contains clause 100, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Carried. on division.
Shall Part 4, Division 1, entitled "Employment Insurance Act,'' which contains clauses 101 to 103, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Carried, on division.
Shall Part 4, Division 2, entitled "Old Age Security Act,'' which contains clauses 104 to 106, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: On division.
Shall Part 4, Division 3, entitled "Canada Education Savings Act,'' which contains clause 107 to 113, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Carried, on division.
Shall Part 4, Division 4, entitled "Canada Disability Savings Act,'' which contains clause 114 to 116, carry?
Some Hon. Senators: Agreed.
Some Hon. Senators: On division.
The Chair: Carried, on division.
Shall Part 4, Division 5, entitled "Financial Consumer Protection Framework,'' which contains clause 117 to 135, carry?
Senator Harder: I move:
That Part 4, Division 5, entitled "Financial Consumer Protection Framework,'' which contains clauses 117 to 135, be deleted from the bill.
The Chair: Our clerk has just asked if she could ask a question.
Ms. Lemay: If I may, the proper way to do that is not to ask for deletion; it's to vote against the section. It would take it away. So the motion, is it carried, and then we proceed to a vote.
Senator Cools: That puts the leader in the position of voting against the government. So there has to be a better way.
Senator Baker: But he has already explained the reason why he's doing it. As a former clerk in a provincial legislature, I think that matches the requirement.
Senator Harder: And I did ask for leave, so the committee is author of its own destiny.
Senator Baker: Exactly.
Senator Harder: With your leave, I would wish to delete that —
Ms. Lemay: So we proceed to a vote.
The Chair: Can we proceed to a vote to defeat? We should do that right now.
Ms. Lemay: Do you want to repeat it?
The Chair: Shall Part 4, Division 5, entitled "Financial Consumer Protection Framework,'' which contains clauses 117 to 135, carry?
Some Hon. Senators: No.
The Chair: Do we have unanimity?
Ms. Lemay: Do you want a roll call?
The Chair: Let's do a roll call, just to make sure that we do everything to the T, if it's okay with our members.
Clerk, would you do a roll call, please?
Ms. Lemay: Yes. The motion is to adopt the section.
Senator Harder: I thought I was asking leave to delete the clause, and now all of a sudden we're not proceeding in that fashion. I would just like clarification.
The Chair: My understanding is we voted against implementing the clause.
Ms. Lemay: Which would take it away.
The Chair: So it didn't carry.
Senator Cools: I think that there has to be a better way where we can be fairer to Senator Harder. For example, Senator Harder could have moved that that section be postponed in consideration, and then, at the end, when it comes to deal with it, make the suggestion that it be —
Senator Eaton: So he'll vote for it knowing that the rest of us will vote against it?
Senator Cools: Say that again?
Senator Andreychuk: I don't think he wants to.
Senator Cools: I don't think we should put him in a position to vote against it. He doesn't want to, so there's got to be another way.
The Chair: Senator Cools, let Senator Harder determine what he wants to do because it's his recommendation.
Senator Harder: I'm seeking leave of the committee to move that this clause be deleted, which would obviate the need for it to be either defeated or carried. That clause would then be excised from the report of this committee to the chamber.
That's the motion I put forward, and I was delighted to see Senator Carignan second it.
Senator Pratte: So let's vote on that motion.
The Chair: Let's do a roll call on the motion, for formality's sake. We agree with the motion; is that correct? We have unanimity? Let's go through the roll call just for formality.
Senator Pratte: So we're voting on the motion?
Senator Mockler: Can we have the nomenclature exactly, chair, with regard to what we're voting on?
The Chair: Would you give us the verbiage one more time?
Senator Harder: With leave, I move:
That Part 4, Division 5, entitled "Financial Consumer Protection Framework,'' which contains clauses 117 to 135, be now deleted.
The Chair: We have the clear wording. Everyone agrees with the wording? Our scribes have that properly taken down? Let's go to a vote, please.
Ms. Lemay: The Honourable Senator Smith?
Senator Smith: I support the motion.
Ms. Lemay: The Honourable Senator Andreychuk?
Senator Andreychuk: Yes.
Ms. Lemay: The Honourable Senator Ataullahjan?
Senator Ataullahjan: Yes.
Ms. Lemay: The Honourable Senator Baker?
Senator Baker: Yes.
Ms. Lemay: The Honourable Senator Carignan?
Senator Carignan: Yes.
Ms. Lemay: The Honourable Senator Cools?
Senator Cools: Yes.
Ms. Lemay: The Honourable Senator Harder?
Senator Harder: Yes.
Ms. Lemay: The Honourable Senator Eaton?
Senator Eaton: Yes.
Ms. Lemay: The Honourable Senator Marshall?
Senator Marshall: Yes.
Ms. Lemay: The Honourable Senator Mockler?
Senator Mockler: Yes.
Ms. Lemay: The Honourable Senator Mitchell?
Senator Mitchell: Yes.
Ms. Lemay: The Honourable Senator Pratte?
Senator Pratte: Yes.
Ms. Lemay: Yeas, 12; nays, zero; abstentions, zero.
Senator Mockler: Who said, Senator Harder, we would not vote for you?
Senator Harder: I can take "yes'' for an answer.
The Chair: Motion carried.
Hon. Senators: Hear, hear.
The Chair: Colleagues, we're not finished yet.
Shall Part 4, Division 6, entitled "Royal Canadian Mint,'' which contains clauses 136 to 139, carry?
Hon. Senators: Agreed.
The Chair: Carried. Thank you.
That sounds like the Mint is going to make a mint — for profit now.
Shall Part 4, Division 7, entitled "Funds Management,'' which contains clauses 140 and 145, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Carried.
Does the committee wish to consider appending observations to the report? We have no observations.
Is it agreed that I report this bill, as amended, to the Senate?
Hon. Senators: Agreed.
The Chair: Agreed.
Colleagues, thank you very much. This was a very interesting meeting, and it was interesting to see how things progress.
Since the bill is carried, there does not need to be a meeting tomorrow morning.
(The committee adjourned.)