Proceedings of the Standing Senate Committee on
Legal and
Constitutional Affairs
Issue 14 - Evidence
Ottawa, Tuesday, June 4, 1996
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill C-28, respecting certain agreements concerning the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport, met this day at 9:00 a.m. to give consideration to the bill.
Senator Sharon Carstairs (Chair) in the Chair.
[English]
The Chair: We begin today with our study of Bill C-28. However, we have a few housekeeping things to do before we begin our study.
The meeting schedule for this week is as follows: Today, then tomorrow at 3:30, even though the Senate may then be sitting -- that is, provided that motion is passed by the house; Thursday at 10:00 a.m.; Monday at 10:00 a.m., and in the afternoon as well, if required. There will also be a steering committee meeting immediately following this meeting this morning so that we can finalize the witness list.
I am prepared to accept a motion this morning that we will not vote on any substantive issues on the bill.
Senator Nolin: I move that motion, namely:
That any consideration or votes on any motions dealing with the disposition in committee of Bill C-28 be held no earlier than the completion of hearings of all witnesses.
The Chair: Is that agreed by all members of the committee?
Hon. senators: Agreed.
The Chair: Carried. Thank you, everyone.
Senator Lynch-Staunton: Madam Chair, Perhaps we could have an indication of which witnesses have been confirmed, so that we can prepare for them accordingly?
The Chair: Yes. Tomorrow we have two witnesses who will be specifically discussing the NAFTA arrangements with respect to this particular bill. They include Mr. von Finckenstein and Mr. McIlroy. We then have a witness on the legal and constitutional issue, specifically on the constitutionality of the bill, Mr. Chipeur. On Thursday morning we have the Minister of Justice, and on Monday morning, we have Mr. Monaghan and Mr. MacKay who, again, will be addressing the constitutionality issues surrounding the bill.
Senator Jessiman: As presently drafted?
The Chair: Yes, as presently drafted. They both have copies of the amendments that were circulated to you yesterday.
Senator Beaudoin: Did you say Monday morning?
The Chair: Yes, Monday morning at 10 a.m.
Senator Lynch-Staunton: That is an impressive list. However, there is a conspicuous absentee, namely the Minister of Transport. Can you confirm that he has been invited, and that you know what his reply was to that request?
The Chair: Yes, the Minister of Transport was invited. He has sent his officials.
Senator Lynch-Staunton: The Minister of Transport will not be here to discuss the political aspects of this bill, or the policy behind this bill?
The Chair: No. The Minister of Transport will not be here; the Minister of Justice will be here.
Senator Lynch-Staunton: Honourable senators, it is normal for the sponsor of the bill to come before a Senate committee to explain those aspects of the proposed legislation which, for obvious reasons, cannot be covered by his officials. This bill, as was its predecessor, was introduced in the House of Commons by the Minister of Transport -- in this case, on behalf of the Minister of Transport. As a technicality, it is his bill. It seems only appropriate that he attend here. In his absence, for whatever reason, he should at least send a parliamentary secretary so that we can delve into those matters touching on public policy, which officials will tell us, with reason, is ground that they cannot go over.
The Chair: The arguments that have been made, over and over, with respect to this particular bill have been focused on the legality and the constitutionality of the bill. That is why we specifically asked for the Minister of Justice, although, at Senator Nolin's request, I also requested the Minister of Transport.
A decision was made that we should focus on the legal and the constitutionality issues surrounding this bill. That is why the Minister of Justice agreed to come before us. In fact, we had hoped that he would come this morning, but he is in cabinet this morning, and asked if we would agree to his coming here on Thursday, which we did.
Senator Nolin: I do not recall that we decided that the hearings would concentrate only on the constitutionality aspect.
The Chair: No. I was not talking about the hearings per se, I was talking about the evidence. Senator Nolin, there will be a steering committee meeting immediately following this meeting with respect to any additional witnesses. The witness list that I gave you this morning was the witness list that we had agreed to until the further steering committee meeting at the end of this morning's meeting.
Senator Nolin: If you recall, I requested some witnesses and your answer was, "Wait until noon, after hearing from the minister." Since then, the minister's testimony has been postponed until Thursday morning. We will have difficulty deciding at the steering committee meeting at noon concerning the future list of witnesses. May I suggest that we postpone the steering committee meeting until Thursday afternoon, after the minister has been heard?
The Chair: Certainly, we can postpone the steering committee until then, at Senator Nolin's request.
Senator Stanbury: I wish to remind the Leader of the Opposition and his colleagues that never in the discussion of this bill, nor its predecessor, have they felt that it was desirable to discuss other than the legal and constitutional matters. That has been expressed time and time again.
Many amendments to the bill have been circulated, and the efforts at amending the bill have been directed at dealing with the concerns that the opposition had. It is those amendments that will be the main subject matter of discussions in the committee. They are legal and constitutional matters. I am not quite sure what this diversion to policy matters means, but it seems to be getting off the track that the opposition has followed all the way through.
Senator Nolin: That is very interesting.
Senator MacDonald: You might tell us exactly what Department of Transport officials are doing here today.
Senator Stanbury: They were asked to attend.
Senator MacDonald: Obviously, they were requested, but was it to talk about the very restrictions to which you have just alluded?
Senator Stanbury: I am told that they were requested by you. They were invited, and they came.
Senator Lynch-Staunton: What will they talk about? Will they be limited to talking about the legal and constitutional aspects of the bill?
Senator Stanbury: I have no idea. I will not limit them.
Senator Nolin: Senator Stanbury, I do not know whether you recall, but when we were dealing with Bill C-22, the second witness we heard from was the Minister of Transport. We specifically asked him questions about the principle and the policy behind Bill C-22, which is the ancestor of Bill C-28. We think it is proper to ask the same questions of the new Minister of Transport about the principle of this bill and the facts behind this extraordinary decision of the government.
We think the Minister of Transport should be heard on the specific questions which we already put to the former minister, Mr. Young. There is no trick; no new strategy. It is only the ongoing question of what is behind this thrust.
Senator Stanbury: As I understand it, as a result of that request, the minister was invited.
The Chair: Yes, he was.
We have with us today two witnesses who are prepared to discuss with us the amendments which were distributed to you yesterday. I am prepared to hold steering committee meetings at the request of Senator Nolin at any time. We can continue this debate after we have heard the testimony of the witnesses this morning. However, it would be appropriate to hear from these witnesses now.
Senator Lynch-Staunton: If I may, Madam Chair, do I understand that from now on the Standing Senate Committee on Legal and Constitutional Affairs will only touch on matters limited to legal and constitutional subjects, that therefore the only minister who will be invited to appear will be the Minister of Justice and that sponsoring ministers of legislation which has been referred to this committee need not appear because we are limited to talking about legalities and not about policy? That is the narrowest definition ever given to this committee since its inception.
As Senator Nolin pointed out, Mr. Rock, when he appeared as our first witness on Bill C-22, urged that Mr. Young be invited because it was impossible for him to deal with questions which will be addressed to him again on Thursday, which questions should normally be directed to the sponsoring minister.
I do not understand the reluctance of this committee to carry on the tradition of inviting the sponsoring minister, or at least the parliamentary secretary, in order to have a full picture of the legislation before us, rather than just a narrow legalistic view. I agree that we have been focusing on that, but we also have many questions on the policy behind this bill; a bill which Senator Kirby has told us the government would like to have passed without amendment.
If the governments wants the bill passed without amendment, the minister responsible should come before us and argue that case. It is to help the government in advancing its case that I urge this committee to support a resolution, if necessary, that the Minister of Transport find the time to give us his views and the reasoning behind this legislation which he has reintroduced, and we should certainly accommodate his schedule in that regard.
Senator MacDonald: In the Toronto Star of June 3 there is an article written by a very eminent journalist, Mr. Edison Stewart -- who is with us today -- in which he quotes the Minister of Transport as follows:
I am not taking a position which is up to the judge to make... because that decision, as to where the level of profits should be --
-- and of course we know what he is talking about there --
-- is before the courts and it would be inappropriate for me to comment on it further.
The Minister of Justice took advantage of the opportunity to revive Bill C-22, the only difference being a numbering change. The amendments which were to be proposed by the Liberal senators were described at some length by Senator Kirby in the Senate last week. We received those amendments yesterday. There was some confusion as to who the witnesses would be this morning. As a matter of fact, we did not know who the witnesses were to be until we walked in just now. We certainly had every reason to assume that we would be hearing from representatives of the Department of Justice or from the minister.
This is Mr. Anderson's bill. He revived the bill. For the life of me, I do not see why he cannot make himself available, as Senator Lynch-Staunton says.
I move that this committee indicate that Mr. Anderson's testimony would be very helpful to the committee, and that he should appear before us.
The Chair: We have a motion on the floor. Senator MacDonald has requested to have the Minister of Transport appear before this committee.
Senator Bryden: Is your motion that the Minister of Transport be invited to appear before the committee?
Senator MacDonald: Yes, that the committee considers that it would be most helpful if Mr. Anderson appear before the committee, and that he make room in his agenda to do so.
Senator Bryden: It is my understanding that such an invitation has already gone forward to the Minister of Transport.
Senator Lynch-Staunton: That is right, but if it comes from the full committee, it may carry greater weight.
Senator Bryden: Madam Chair, is it correct that an invitation has gone forward?
The Chair: A verbal invitation was extended to the Minister of Transport; not a formal, written invitation.
Senator Lynch-Staunton: That is the way things are usually done, and usually the ministers reply affirmatively.
Senator Bryden: May I make a suggestion? In order that we do not have to deal with these motions one at a time, although we are prepared to do that if it becomes necessary, I suggest that the Chair may wish to put the invitation in writing to the minister. It will then be the minister's decision whether to appear or not.
The Chair: At the conclusion of this meeting, I will put in writing an invitation to Mr. Anderson.
Senator MacDonald: Please indicate that it was the wish of the entire committee that the invitation be extended.
The Chair: I will so do.
Shall we now hear from our witnesses?
Senator Lynch-Staunton: We are looking forward to that, but let us try to follow the correct procedure. We have talked about amendments, but there are no amendments on the table. If the witnesses are here to discuss amendments, the amendments should be tabled so that they are part of the record. We received, at the last minute, a memo saying that these amendments will be proposed by Liberal senators. Until they are, we do not have them before us.
Senator Bryden: Would it be appropriate to move these amendments now?
The Chair: No, but it is appropriate to table the amendments now.
Senator Bryden: I am prepared to do that. I will table the amendments.
Senator Lynch-Staunton: How can you table them if you are not proposing them? We are doing things a little back to front. Usually, when a bill is before a committee it is discussed with witnesses in order for senators to get a better appreciation of the views on it and of the bill itself. Even before we have had a chance to discuss this bill, we are told that it will be amended. It is normal that we have a discussion first, after which the amendments are presented. Then, with a better appreciation of the bill, we can better appreciate the amendments. However, here we are being told to look at and discuss the amendments right away, and the bill becomes secondary. That is not the way to proceed, Madam Chair.
The Chair: Senator Lynch-Staunton, it is the way in which this committee has proceeded. We proceeded that way with Bill C-8 only last week.
Senator Lynch-Staunton: With Bill C-8, you presented the amendments on the first day, before any witnesses appeared.
The Chair: No, we tabled a series of amendments when we had departmental officials before us, so that they could go through them with us and tell us exactly how those amendments would affect the interpretation of the bill. It is my understanding that we can only move amendments when we are in a clause-by-clause study of the bill. We are not in a clause-by-clause study of the bill at this particular point in time.
My understanding is that we can table the amendments. We can then ask our officials to discuss those amendments with us this morning, to explain those amendments to us, and to answer any questions that senators might have about those amendments as to whether they meet your expectations or requirements or needs. However, we will not move those amendments until we actually get into the clause-by-clause study at some future meeting of this committee.
Senator Lynch-Staunton: These are amendments proposed by Liberal senators. Why do we ask the departmental officials to explain them? These are amendments, according to the memo dated yesterday, to be proposed by the Liberal senators. It would be up to the Liberal senators to explain them, not the departmental officials. The departmental officials are here to defend the bill. They do not have any amendments with them. They are here to discuss a bill which the government has said it wants passed without amendment. Now we are told that there are amendments to be proposed by the Liberal senators, not by departmental officials. Our colleagues certainly can enlighten us.
Senator Bryden: Madam Chair, it is certainly in keeping with the procedure that I have seen, in the little time that I have been here, if the amendments are tabled. The departmental officials can address the bill which is before them. It would be open, I take it, in the interests of time, to ask them whether or not the amendments, if they are indeed proposed, would address some of the current concerns that have been raised. That is what I would propose to do as against going through the bill, which has been before a committee at some point for two years. Many of the positions are quite well known. That would give us the opportunity to not only consider the bill, but ask questions of these officials concerning the amendments, if they wish to comment on them, without the necessity of having to then recall the officials.
It has been my experience with the committee, at least up to this stage, that everyone has cooperated in an attempt to deal with the issues before us substantively and objectively, and in order to move the proceedings along. I would assume that that is the same position that we would be taking now. I am prepared to table the amendments, if that is the wish of the chair.
Senator Beaudoin: On the question of procedure, if Senator Bryden is about to table the amendments, I take it that the Liberal senators have made their choice, and what they want here is a debate and questions to the various witnesses on the amendments. In other words, you have made up your mind that you want some amendments.
Senator Kirby's speech was in two parts. He said that the government preferred the bill without amendment, but that amendments may be proposed. Now we hear this morning, and I want to be clear on this, that if the amendments are tabled, and if we want a debate on the amendments, it is because the only thing that will be before this committee are the amendments on the bill.
Senator Bryden: If I could reply to that, I think the position is really quite clear: The government is perfectly prepared to have the bill without amendments. Our position is that it is legal, constitutional, and so on. If it comes down to that, the members on this committee are prepared to report the bill as is, without amendments.
However, we believe that, in the interests of moving the bill along, and in the interests of all of the discussion and so on that has gone before, it would be preferable to have the amendments before us. I know you had considerable concerns, as did other senators, as to whether the amendments address their concerns with respect to the bill. I think we need to be very clear that the members on this side are perfectly prepared -- and we could do it today, if you wish -- to report the bill without amendment.
However, we are saying that, at the time of second reading, in fairness to the house, Senator Kirby indicated that, given the history of the bill, we would be prepared to introduce amendments which the government believes, and which senators believe, address at least a good number of the constitutional issues that were raised previously.
Senator Beaudoin: The issues which were raised last year.
Senator Bryden: Yes. In the interests of trying to be as open as possible -- and I certainly was part of the discussion yesterday to see if there was some way in which we could at least get the amendments into your hands before today's meeting -- it was decided that we would put those amendments before you. That would give us the opportunity to discuss the bill in its original form, and thus have some idea of what amendments would address our concerns.
Senator Nolin said, in relation to policy, that there are no tricks here. Believe me, there are no tricks here, either. We are simply trying to move the matter forward.
Senator Jessiman: Through you, Madam Chair, to the senator, is it clear, as Senator Kirby said, that if no one on this side is prepared to move or second these amendments, they will not be moved or seconded by anyone? If no one on this side is prepared to move or second the amendments, whatever they may be, will there be no amendments moved or seconded by this committee?
Senator Bryden: I do not know that I am in a position to answer that question.
Senator Jessiman: That is what he said in the house. That is what the Leader of the Government said, as I understand it, as part of her remarks. Only if we insisted upon them would those amendments be moved and seconded. My question to you, or through you to others is: if we on this side are not prepared to move or second any of those amendments, or any amendments, do we assume that these amendments will not be moved or seconded and that the bill will go through as presently before us? Could we have an answer to that? If you are not trying to hide anything, tell us.
Senator Lynch-Staunton: He is tabling the amendments for discussion, so I assume he will propose them in due course.
Senator Bryden: I do not recall the exact words that you quoted and, as you know, I would not therefore accept them as such. I will say what I said before, and that is that the bill is before us. The government has taken the position consistently that the bill is legal, constitutional, and within Parliament's right to pass.
Throughout the history of the bill, however, there have been various concerns raised with certain aspects of the bill, and a great deal of effort was made over two years to try to address those concerns. We have here the attempts to address them.
As we proceed, it may be that the folks on the other side will take the position that their concerns about the legality and constitutionality of the original bill no longer exist. I wanted to take a position that said, "Let's get everything before us, and let's proceed through the committee. Then, if the amendments are required, we will deal with those at that time." Whether they are proposed by your side or by our side, or however that works, believe me I have not gone down the road to the technical aspects of that. I just think that, in fairness, it would be good to have before us not only the original bill but the suggested solutions to any difficulties that have been anticipated might arise before the committee. If you, or we, wish to ask witnesses whether these amendments address those concerns, then the amendments would be available to us here.
The Chair: I have two points, and then I hope we can go on with the witnesses.
First, Senator Jessiman, to be clear on the point that you made, there is no seconder required for a motion in this committee. Second, the procedure that we are following this morning in discussing some amendments with Mr. Desmarais, and in this case Mr. Baker, is identical to the procedure that we followed on December 13, 1994. At that time, our witnesses were Mr. Desmarais and Mr. Pigeon, who I understand is no longer with the department. We are proceeding in an identical fashion to the way in which we proceeded at that time.
Senator Lynch-Staunton: Is Senator Bryden tabling the amendments on behalf of Liberal senators and the Government of Canada?
The Chair: He is tabling them on his own behalf.
Senator Lynch-Staunton: Do these amendments have the sanction of the government? Since the officials are here to discuss them, I assume the government supports them.
Senator Bryden: I do not know the answer to that question.
Senator Lynch-Staunton: May I ask, then, who prepared these amendments?
Senator Nolin: Who wrote them?
Senator Lynch-Staunton: It would be good to know the origin of the amendments.
Senator Bryden: The amendments were prepared by the government, but whether they were prepared solely for my use or not, I do not know. The intention is to put them before the committee.
Senator Lynch-Staunton: Senator Bryden, I am anxious to hear the witnesses, too. These amendments in form and content, with few exceptions, are exactly the same in form, content, presentation and type as those that Minister Rock brought to us, whenever that was. Therefore, can we assume that these have the approval of the Government of Canada, since they have been prepared by the Government of Canada for presentation to this committee? These are government amendments; proposed amendments, in other words.
Senator Bryden: As you have indicated, senator, the fact that many of these amendments were prepared with Bill C-22 in mind -- and there have been some changes and slight adjustments to the amendments to address certain additional concerns -- is an indication to our committee that the government is prepared to support the amendments, if indeed the committee requires them.
Senator Lynch-Staunton: This is turning into a silly joke. In December of 1994, we received amendments with a code at the top which read "003-002.01a FOR USE IN PARLIAMENT, Clause 3, Page 2". In June of 1996, we receive a sheet of paper with "003-002.01a FOR USE IN PARLIAMENT, Clause 3, Page 2." It is exactly the same. The first one was prepared and presented on behalf of the Government of Canada when Mr. Desmarais and Mr. Pigeon were here. Now Mr. Desmarais is here with another colleague, I assume to defend the same amendment on behalf of the Government of Canada.
I want to establish the role of Mr. Desmarais and his colleague in discussing these amendments. Are they discussing them on behalf of the government, which prepared similar amendments for discussion here in December? Or are they just looking at them casually and saying, "Well, Senator Bryden has brought them down, so let us have a look at them"? I want to know how seriously we must take these amendments.
Senator Bryden: The position is that these amendments were prepared by the Government of Canada for use by this committee. We can propose them to the committee and they would be acceptable to the government.
Senator Lynch-Staunton: These are government amendments. Thank you, Madam Chair.
The Chair: Thank you. I think we are prepared now to hear from Mr. Desmarais and from Mr. Baker.
Senator Beaudoin: Are the amendments tabled?
The Chair: Let us have a formal motion to ensure that it is clear.
Senator Bryden has tabled the amendments which he has brought to this committee. Is it agreed that they be tabled with the committee, honourable senators?
Hon. Senators: Agreed.
Senator Bryden: I believe these amendments were circulated to all the members of the committee.
Senator Lynch-Staunton: Yes, better late than never, I suppose.
The Chair: I would now invite Mr. Desmarais and Mr. Baker to begin their presentation.
Mr. John Desmarais, Director General, Special Projects, Operations Coordinator, Department of Transport: Madam Chairman, I have appeared before this committee previously in connection with Bill C-22, as well as at the inquiry which concerned itself with the cancellation of the agreements. I have not prepared a formal statement to present to senators this morning.
I would reiterate that it has been, and still is, the government's position that the opponents of this bill and the cancellation are entitled to their out-of-pocket expenses, minus lobbyist fees, and that is the limit of it. The amendments that have been tabled with the committee, which I looked at last night and this morning, allow for that and only that. The position of the government has not changed; it is more that the form of the bill has changed with these amendments.
With those brief comments, Madam Chairman, I am prepared to answer any questions committee members may have.
Senator Bryden: Madam Chair, could you ask Mr. Desmarais to introduce the other witness who is accompanying him?
The Chair: The other witness is Mike Baker, Director, Corporate Issues, Policy and Coordination, Department of Transport.
Senator Lynch-Staunton: Will someone take us through these amendments?
Senator Nolin: Can we go through all the amendments and have explained to us why you have agreed to them?
My next question is this: Where is Mr. Pigeon? Is he no longer with the department?
Mr. Desmarais: He is with the Department of Justice; he was assigned to the Department of Transport. He is still assigned there. My understanding is that he is not available this week. He has been negotiating the transfer of airports to local airport authorities. I am not sure exactly what his status is this week. Those transfers are a priority of the government, as well, and that is where he is.
The Chair: I was given the information as to what happened to Mr. Pigeon. I apologize for not having passed it on to members of the committee.
Senator Nolin: Can we go through all the amendments one by one?
Mr. Desmarais: We may. The first amendment concerns clause 3 of the bill which presently states:
The agreements are hereby declared not to have come into force and to have no legal effect.
The proposed amendment states:
The agreements are hereby declared to have no legal effect after December 15, 1993.
You will recall that in February of 1995, we were in court. The court recognized that the contracts were repudiated as of December 3. Therefore, there was a legal existence to the contracts. There was a recognition of a date when they had been cancelled, if you like, by repudiation. Therefore, the recognition of that fact is now in this bill, as opposed to the former bill which said that they had never come into being, if you like.
Senator Nolin: Before we go on to another amendment, in French we use the word "résiliation." Is that the same as "repudiation"?
Mr. Desmarais: I am not a lawyer so I cannot say, Senator Nolin. The repudiation, as I understand it, is that the government said, "We will not recognize this document, this agreement, and we will not allow you to undertake it." On that basis, that is a repudiation. When that repudiation is recognized by the other party, the contracts come to a legal end. That is my understanding.
Senator Nolin: Your understanding is that there was a set of contracts, or "accords", as defined in clause 2, and at a specific date they were to end, is that right?
Mr. Desmarais: Yes, sir, that is my understanding.
Senator Beaudoin: Clause 3, which may be amended, states:
The agreements are hereby declared not to have come into force and to have no legal effect.
As a result of the declaration of the court in Toronto, you now recognize that the contract has existed, and that it will have no legal effect after December 15, 1993; that is, after the "résiliation". I just want to make that clear for the purposes of the record.
Mr. Desmarais: I cannot speak to the definition of "résiliation" because I do not understand the French legal terminology.
We recognize here the court's finding that these contracts existed up until they were repudiated. At the date of that repudiation, the contracts ceased to have legal effect.
Senator Beaudoin: That is good enough.
Senator Nolin: Do you know the court's finding -- perhaps you cannot answer this without referring to the court -- on the starting point of the legal effect of the contracts?
Mr. Desmarais: I would imagine when they were signed.
Senator Nolin: When you say "repudiation," do you mean that rights for the parties to those accords have begun, have come to life, between a specific date and another specific date, within a certain period of time?
Mr. Desmarais: Yes, sir.
Senator Nolin: Those rights still exist, even if there is repudiation. But no new rights came to life after the end, after the specific date when those accords ended. Am I right?
Mr. Desmarais: No rights arose under the contract, I would say, senator.
Senator Nolin: No new rights arose under the contract?
Mr. Desmarais: That is correct. I have some difficulty here. When a contract is cancelled by repudiation, or breached if you like, there are some rights which arise under law for damages for that specific action. We are not saying that those legal rights do not exist here. If we get into the further amendments, we will see that there is a right to go to the court to claim damages. I am not saying that those new rights were abrogated under this new amendment to the contract.
Senator Bryden: Madam Chair, just on this point, and having looked at the previous records, it is my understanding that the parties to the contract have agreed on the date December 15 as the operative date when the contract was repudiated.
Mr. Desmarais: The date December 15 was chosen because, when we went into the Nixon review, we had extended the date from the turnover date of the facility or the asset from November 1 to December 15. That was the date they were supposed to assume the asset under the contract. That is the reason that date was chosen. By the court action, the actual date is December 3.
Senator Bryden: You had stated -- and believe me, you should not have to read all of those reams of papers -- that the December 15 date, which is a little later, is acceptable to both parties?
Mr. Desmarais: To the government.
Senator Bryden: And to the other party as well?
Mr. Desmarais: I have not talked to the other side on that particular amendment, but it gives them a few more days than what the court allowed, so I would assume that that would be acceptable. Again, you may need to ask them, rather than me.
Senator Lynch-Staunton: Now that the government has signed a legally binding lease, according to what I read in the newspapers, between itself and the GTAA for the administration of Pearson -- although the closure will not take place until December, it is still a legally binding agreement -- what is the point of having this clause in here?
Mr. Desmarais: I am not sure what your question is, senator.
Senator Lynch-Staunton: The airport has been transferred to another authority. What is the point of repeatedly writing what is so obvious, and accepted by everyone?
Mr. Desmarais: Senator, you will recall that, under the agreements as they existed with T1T2 Limited Partnership, there was an allowance made to transfer the total airport to the GTAA. The landlord, in effect, became the GTAA at some future date. That was always available. Just because we transferred the total airport -- we transferred more than the terminals, in other words -- that does not mean that this legislation is not needed.
Senator Lynch-Staunton: I just wanted to clarify that. It is interesting that you make reference to the court judgments which, in effect, have forced these amendments. The Department of Transport and the government are recognizing that there have been court judgments declaring the contracts breached.
Mr. Desmarais: We recognize that the contracts did exist, senator. Whether or not that was forced by the courts, it is a fact of life now.
Senator Lynch-Staunton: The government accepts that now, but it did not do so in 1992.
Mr. Desmarais: In December of 1994, no, it did not.
Senator Lynch-Staunton: It did not recognize that when Senator Kirby spoke in the Senate and said he would rather see this bill passed in its integral form, and when Senator Bryden, a few moments ago, repeated that. Now we hear that, because of court judgments, we do not have much choice; we must abide by the court decision.
Mr. Desmarais: We are abiding by the court decision here.
Senator Lynch-Staunton: That is right. Senators Bryden and Kirby have taken good note of that.
Mr. Desmarais: There is a choice you can make, senator. You do not have to necessarily abide by that decision. That decision just says that the contracts ended on December 3. The government could still make a decision that the contracts never came into legal force. It is my understanding that that would be a constitutional decision.
Senator Lynch-Staunton: Yes. I know that is the understanding which you have been told to pass on to us. How can you justify accepting a court judgment, on the one hand, and then trying to nullify it on the other hand?
The government has not appealed the Court of Appeal judgment which upheld the lower court's judgment; they have not sought leave to do so from the Supreme Court. It seems that they passed on that one final effort to have the decision overturned, and thereby accepted that the case should proceed.
Mr. Desmarais: It was an acceptance by the government that, if the lease existed, the government had breached it.
Senator Lynch-Staunton: At the time, they even tried to have that finding declared as unconfirmed. I am sorry to ask you these questions, but they are essential. I am sorry because, by your own admission, you do not have the legal training to get into the more technical aspects of this.
That is why, although I and others will ask you questions, I am afraid you will not be able to answer them; nor will your associate. I do not understand, then, why we did not have someone from the Department of Justice to help us on the legal side.
Mr. Desmarais: I understand that someone will be appearing from the Department of Justice to address the legal side. I was here to address the policy side of these amendments. It is translated into legal wording.
Senator Lynch-Staunton: We will try to restrain ourselves, although we were told by the chairman when we first started out that our only subject for discussion here was the legal and constitutional side, but you are willing to discuss the policy side?
Mr. Desmarais: I am willing to discuss the policy side.
Senator Lynch-Staunton: Alice in Wonderland and I have something in common: It gets curiouser and curiouser.
Senator Nolin: The policy reason is the court decision; is that right?
Mr. Desmarais: Basically, we are saying that the court decision allows us to make this change.
Senator Jessiman: I would like to just go to the amendments you are suggesting for section 7.
Senator Lynch-Staunton: Let us do this in order, now.
The Chair: Are we prepared to move on to number 4?
Mr. Desmarais: In clause 4, there is an ancillary change that arises out of clause 3. For the same reasons that clause 3 came into effect, clause 4 was changed. The old clause 4 declared that the agreements never came into existence. The new clause 4 says that they have no legal effect after December 15. It is just an ancillary change.
Senator Nolin: I assume it is the same thing for clause 5?
Mr. Desmarais: I would assume. I am looking at the old clause 5 here. Yes, it is the same thing for clause 5, using December 15 rather than a statement that it has never come into existence.
The Chair: Now we are on clause 7.
Senator Jessiman: Are you suggesting that words should be added to amend this as "before or after coming into force of this Act"? Those words were not there before. I am not asking you a legal question, but is it not true that, as it is worded presently, the present judgment will not be affected, since there is a judgment outstanding? It is just a question of quantum now. If you do not have "before or after coming into force of this Act," this number 7 will not cover the present action, will it?
Mr. Desmarais: I cannot answer that, senator. I am not schooled enough in the law.
Senator Jessiman: Is that not your understanding, from what you have been told?
Mr. Desmarais: My understanding is that this change is made because we later on removed the June 30 date. We had a specific date in the old act of June 30; that no claim could be advanced after June 30 of 1993. I will have to find that clause -- I believe the June 30 date was in one of the previously proposed amendments, rather than in the bill itself.
Senator Jessiman: I understand that, but you do not have the words in clause 7 now as the bill is presently drafted. The government is suggesting that we add the words "before or after coming into force of this Act." I am not asking you to be a lawyer and tell me what the words mean. I am wondering if the government told you why these words were necessary. I am suggesting to you that the reason the government needs this amendment is that there is an outstanding judgment, and if these words are not used, the clause will not apply.
Mr. Desmarais: Senator, if I go back to clause 7 in the original bill, it barred any legal proceedings at all.
Senator Jessiman: That may be, but that has to apply to future matters. It does not say "before the coming into force of this Act."
Mr. Desmarais: I believe it says:
7. No action or other proceeding, including any action or proceeding in restitution...
lies or may be instituted...
and I believe that underlies the issue in the sense that the word "lies" indicates to me anything that started before.
Senator Jessiman: What will you do now? We have a judgment. Let us assume damages have been awarded and have been paid. Must those damages be given back?
Mr. Desmarais: Under this bill, if damages were awarded, no, they would not have to be given back.
Senator Jessiman: Now we have a judgment. Are you saying the judgment is affected by this clause? It is not instituting an action.
Mr. Desmarais: The judgment issued in February 1995 is not impacted by this act. The award of damages may well be.
Senator Jessiman: Yes, unless you put into the bill the words "before or after the coming into force of this Act".
Mr. Desmarais: I am not sure I follow the sense of your question, senator.
Senator Jessiman: I am saying that if you do not put that phrase in the clause, the judgment speaks for itself and is effective. However, if you make the amendment, it could have an effect.
Senator Bryden: If you look at the original clause 8, it states:
8. Every action or other proceeding referred to in section 7 instituted before the coming into force of this Act is hereby set aside or dismissed.
I do not want to argue the legal case here, but I do not think this affects the before or after issue. It is not new.
Senator Jessiman: It does not say "a judgment." It says "every action or other proceeding." It is not a judgment.
Senator Beaudoin: On the question of substance, we must take into account the fact that the first bill, Bill C-22, said that this agreement never existed, and has no legal effect. Now the proposed amendment is that it existed but it has no legal effect after December 1993. It is a complete negation. It is a very strong amendment. We have also considered number 4.
The question now is that the legal effects are there until December 1993. There is no doubt in the world that there was an agreement, and that all of the effects are there. The courts will be bound by that. However, after December 1993, there will be no legal effect. Number three is in that direction, and four is in that direction. We must take that into account.
What the courts will do if this bill is adopted with those amendments is another thing. It is up to them. However, we must rcognize that there was an agreement, and that that agreement has all its effects until December 1993. This is what those amendments say. In my view, it is very clear. I want to be sure about that. This is what I understand, Mr. Desmarais.
Mr. Desmarais: Basically, I am saying that the agreement was in place until December 15, yes.
The Chair: Senator Nolin, do you wish to move on to the next amendment?
Senator Nolin: I wish to deal with the question of immunity in the proposed clause 7.
When we discussed Bill C-22 and a similar amendment was proposed, it was your answer to extend the normal immunity granted to a minister and to officials of the government to non-officials of the government or consultants. Your answer at the time was that it is rare, but that it happens.
I want to put to you the same question: Why would we use that rare situation to extend immunity to non-officials of the government or outside consultants?
Mr. Desmarais: As I said at the time, the immunity was extended to all officials and consultants who had been involved on the government side on this cancellation, if you like, because the government recognized that it was solely responsible for the cancellation. The consultants were not responsible for the cancellation. Nothing the consultants had done was responsible for the cancellation. It was the government's decision to cancel.
We also had consultants dealing with the proponents on a one-to-one basis many times. Where those consultants may have given advice to the other side that had been relied upon or not relied upon, depending on how the discussions went, we were granting immunity on that basis as well. The deal was a deal with the government and the other side, not between consultants and the other side. No matter what had been said during negotiations by consultants or any others, those were now the government's responsibility, and not the consultant's responsibility.
Senator Nolin: For whatever action was taken by outside consultants?
Mr. Desmarais: Yes.
Senator Nolin: Of any sort?
Mr. Desmarais: Of any sort.
Senator Nolin: As long as they relate to those agreements, they can say whatever they want?
Mr. Desmarais: As long as they are within the mandate of their contract.
Senator Nolin: Let us take Mr. Nixon as an example. There was no written mandate for Mr. Nixon.
Mr. Desmarais: My understanding is that it was very broad, but it was a mandate.
Senator Nolin: In his report, he referred to a mandate that he received from the Prime Minister.
Mr. Desmarais: I saw a mandate.
Senator Nolin: Oh, you saw a mandate?
Mr. Desmarais: I saw a one-line mandate in his contract -- I believe it was his contract -- which said that he was to examine and report upon all matters related to the Pearson cancellation.
Senator Nolin: Can we see that document, please?
Mr. Desmarais: I thought that was available. I will try to find it.
Senator MacDonald: We have it.
Senator Nolin: It means that any outside consultant, as long as they work --
Mr. Desmarais: -- within the mandate of the contract, are protected by this clause.
Senator Nolin: If we take Mr. Nixon and take your word on that, it is very broad. He could have said whatever he wanted, publicly or privately, to anyone and influenced that third party, and Mr. Nixon would be immune from doing almost everything as long as it related to the agreement.
Mr. Desmarais: To use your example, as long as what Mr. Nixon did fell within the mandate that the government gave him, I think he has immunity. I would suggest that you put that question to the lawyers. I am not prepared to say legally that there is not something he may not be immune to, but my understanding is that he would be immune as long as he worked within his contract mandate.
Senator Nolin: It is, in my understanding, a very broad policy of the government, of your department, to grant that immunity that you already have. The minister already has this immunity. By the way, we do not need clause 7 to cover your immunity, nor the immunity of the minister; you already have that. However, to grant that immunity to an outside consultant is a very broad, new policy for your department, is it not?
Mr. Desmarais: It is not particularly new, but it is used very rarely. Many times it is covered in the contract.
Mr. Mike Baker, Director, Corporate Issues, Department of Transport: To add to what Mr. Desmarais is saying, this is a normal part of much of the contracting process. It is not a new policy, per se.
Mr. Desmarais: We have here several contracts with several different departments. You will grant me that the contract with Mr. Nixon was issued by the Privy Council Office and not by the Department of Transport. That is well known. I believe Senator MacDonald can verify that.
They may not have had the typical immunity we would grant in a departmental type of contract, so we are extending it.
Senator Nolin: But usually in those contracts, the mandate of the specific contract is clear?
Mr. Desmarais: That is correct.
Senator Nolin: It is limited, or narrowed, to specific actions of that consultant, so that in the performance of those actions, you are immune, right? That is the intent, usually.
Mr. Desmarais: That is the intent.
Senator Nolin: I come back to Mr. Nixon. We do not have that circumspect area of work. It was very broad. That is why I say it is a very unusual, new policy from your government to grant that type of immunity for so broad a mandate. You are speaking on government policy, and that is why I asked you if it is new policy.
Mr. Desmarais: It is not new policy. The extension to Mr. Nixon, you may say, is new policy, if you so desire. However, we do not see it that way. We see it as just a normal application of our existing policy to a contractor who was operating in good faith, and reporting back to the government.
Senator Beaudoin: On this question of legal immunity, usually there are three classes: the minister, the servant, or the agent.
Mr. Desmarais: That is correct.
Senator Beaudoin: Now you are adding another class inside of that which is very vague, and may include nearly everything. It is a question of law that we will raise on Thursday, because an immunity clause must be drafted very clearly.
Is this the first time you have added such a clause to a piece of legislation?
Mr. Desmarais: It is the first time, to my knowledge, senator. I am not a historian of legislation before Parliament in that sense, but it is the first time that I have seen it used, and the first time that I have used it.
Senator Beaudoin: We will come back on Thursday and discuss that further.
Senator MacDonald: It will not do us any good.
The Chair: Senator Nolin, have you completed 7, and will you now move to 8?
Senator Nolin: What is the policy behind your proposed clause 8? What should we know?
Mr. Desmarais: I believe the policy behind this flows amendment from the first amendment. We have recognized that an agreement existed. We recognize that the courts have some jurisdiction in determining damages. We also recognize that we cannot ask for a specific amount, if you like, to be claimed because of the time frames, and so on.
We are saying here that we recognize that this will go before a court for determination of damages of some type. You can go to the court and you may make a claim only with respect to those things that relate directly to the terminals, Terminals 1 and 2, or the agreements, if you like. Those are the only two areas of claim that are recoverable by law, which is obvious, and that is the limitation.
You will recall that clause 9 of the unamended bill said that no one is entitled to any compensation, period.
Senator Nolin: On this proposed clause 8(1), you have abandoned two earlier amendments that you had already proposed.
Mr. Desmarais: That is correct.
Senator Nolin: Why so?
Mr. Desmarais: As I say, this case has gone on for quite a while. There are legal fees building up for many people. To ask someone to set a specific amount usually is done in arrears. When you go to court, you go as of the day of court, or at the end of the court judgment, whenever that may be, for determination of damages, specifically costs. Therefore you cannot ask for a specific amount. You can get a general idea, but you never get a specific amount. That rules out a specific amount, if you like.
Senator Nolin: If I recall, that was one of our arguments last time around.
Mr. Desmarais: It may well have been.
Senator Nolin: We wanted to know why you would ask for a fixed amount for something unknown. What about (d)?
Mr. Desmarais: I remember the discussions regarding June 30. I had said that (d) originally came from the discussions that Mr. Wright had had with the other side, in which he had given them a time deadline of June 30 to submit their claims to the government, if they were to be considered for compensation by the minister under the old act.
When the only available method of compensation is a payment by the minister, there is no need for a specific date. The courts will determine what those dates should be. Therefore, "on or before June 30" has no meaning, if you like. If you institute your proceedings in 1997, you have legal fees from June 30 to 1997, in theory, which you should be able to claim. Those are the types of costs.
Again, June 30 is tied to the idea of specific amount, and the fact that the minister was to have been allowed to make some type of compensatory payment under the old act. When those two provisions disappear, there is no need for the June 30 clause.
Senator Beaudoin: I have a general question about clause 8. We may always repudiate a contract if we are ready to pay the damages -- within a certain framework, of course, but that is the law. Here, we have an exclusivity clause. General damages are accepted in principle, but of course we have many exclusions. We want to know a little more about why some domains are excluded.
For example, exemplary damages are not awarded very frequently. I am a little bit surprised that they are set aside, but there must be a reason. I think you are here to answer those questions.
Why have you selected some specific domains of exclusion instead of relying on the courts? The courts are there in our judicial system to award damages in certain cases, so what is the philosophy behind that?
Senator Nolin: That is a policy question.
Senator Beaudoin: It is really a policy question.
Mr. Desmarais: When the government cancelled this deal on December 3, 1993, it indicated that it was willing to pay some type of compensation to these individuals for the cancellation. It also indicated that because they had not taken over the property, and had not spent any great amount of money in fixing the assets, they would restrict that compensation to their out-of-pocket costs, minus lobbyist fees. As to the lobbyist fees, you will need to ask the government. I am not privy to that information. Therefore you are restricted to out-of-pocket costs because we will pay you back what you spent.
In the normal course of a tender action, if you cancel the tender before you sign a contract, you may agree to pay the costs up to that point, but you do not pay any costs beyond that.
That was the genesis of that thought, namely that we will pay costs up to the point of cancellation and any costs for termination, and so on, of employees. Your out-of-pocket expenses will be covered, but that is all. That is the policy aspect from which the government was coming.
Senator Beaudoin: I understand why you put the date, but why do you exclude some domains?
Mr. Desmarais: Like lost profits?
Senator Beaudoin: Such as paragraphs (a), (b), (c), (d), (e), et cetera.
Mr. Desmarais: Let us go through the domains that have been excluded. We can then come to your question directly. We have stipulated awards that may not be made. You can sue the government for damages. We have agreed to that up to this point. We then come to clause 8(4) in the amendments, which sets out the things for which we will not pay damages, including loss of profits.
Senator Nolin: Clause 8(2)?
Mr. Desmarais: No, proposed clause 8(4), my draft. I am looking at the crossed-out draft here.
Senator Nolin: You were referring to the May 1995 and December 1995 amendments?
Senator Beaudoin: We do not have the same document. We will be in trouble.
Mr. Desmarais: I hope I have the same document. I am not sure that I do. Maybe I should have a look at the document you have.
Senator Jessiman: It is numbered 008-003.
Mr. Desmarais: I did not have this copy of the document.
Under clause 8(2)(a), there is no loss of profits. That was a policy decision, as I have just explained. Clause 8(2)(b) concerns no payments to lobbyists, even if they were an out-of-pocket cost. Clause 8(2)(c) concerns any investment in any company or partnership controlled by one or more of the partners. This clause is saying that there were probably many transactions between the partners as to various subcompanies that had some subcontracts involved in this deal. Those things should be settled between the partners, and have nothing to do with the government. Therefore, we will not award you any damages for that type of interplay within the partnership.
Senator Nolin: I have a question for you with regard to paragraph (c). Why? I remember asking you the same question two years ago. I am still not convinced of the answer. Why? The government, the Queen, has led individuals to believe something, but then one day the Queen says, "No more. That is it. It is over. And, by the way, I am not paying for any damages incurred by your interpretation of my decision."
Mr. Desmarais: I am not following you.
Senator Nolin: Is it the policy and understanding of your government that that is equity?
Mr. Desmarais: I am not following your question.
Senator Nolin: The Queen, the government of this country, is taking a decision and awarding a contract.
Mr. Desmarais: That is correct.
Senator Nolin: It is not happening overnight. It is a long process. It concludes somewhere in 1993. Leading up to that, individuals or corporations have decided to invest.
Mr. Desmarais: That is correct.
Senator Nolin: That is what you are referring to in paragraph (c).
Mr. Desmarais: Not directly, senator. I am not saying that those people have decided to invest in the T1T2 Limited Partnership.
Senator Nolin: I am not saying specifically T1T2. I am saying "invest."
Mr. Desmarais: They have an investment in the T1T2 Limited Partnership. They set aside a certain amount of equity, which is still whole, or will be made whole with the cost payment, plus other costs that they may have spent that did not come out of that equity. That will exist and be paid. They will have that.
What we are talking about here are subsidiary companies. You can have several types of various subsidiaries that occur in here. A partner decides to invest in a subsidiary company because of an expectation that T1T2 will do something for him. That is not something the government caused to occur. That is not something that the contract caused to occur. That is a decision which the individual made to invest.
Senator Nolin: Are they seeking that in court?
Mr. Desmarais: Not currently, no.
Senator MacDonald: Are you talking about third party claims?
Mr. Desmarais: Basically, third party types of claims that arise out of this matter and have an investment in various partner investments, third party claims.
Senator Jessiman: Thus Paxport could be held responsible under these third parties, but could not get relief from the government?
Mr. Desmarais: I am not sure Paxport is the right vehicle to use. Let us take, for example, a company called Pearson Airport Management. That is a company which was established to manage the contract. It was not established by the whole partnership but by several partners. It had no share capital, if you like, in that establishment, except for some minor investment to incorporate it. Shares in that company changed hands between individual partners at a value. That is what is being excluded.
Senator Jessiman: You mean that someone paid something but they will not get it back?
Mr. Desmarais: Except from the partner to whom they paid it.
Senator Lynch-Staunton: What I find most objectionable about a terribly objectionable bill is that now that the court action has started and a claim for damages is being heard, one of the parties to the claim -- the defendant in this case -- has decided to change the rules. If this bill is passed, it will be telling the judge hearing the case, "Forget what you have heard. Dismiss certain things. Negate that." In other words, the court action is being heard under established rules for claims of this sort. Nonetheless, the government will interfere in that action, particularly with this clause.
What makes it more reprehensible to me is that not only will the government interfere, but it is a party to the action. As a defendant, it is making use of its parliamentary position to ask Parliament to pass a law which would instruct the judge to ignore to a large extent what, in this case, she has already heard and follow these narrow guidelines in coming to a decision. How can the Government of Canada justify such a recommendation?
Mr. Desmarais: Again, I am not sure of the thrust here. You say that we are changing the rules in mid-course. These rules were put out before this court action started.
Senator Lynch-Staunton: No, the recommendation was put out. These are not rules. This is a proposal which has not been approved.
Mr. Desmarais: This proposal was put out before the court action started.
Senator Lynch-Staunton: That is right. It was bad enough at that time, but it is worse now that the court action has started.
Mr. Desmarais: But the government's position has not changed from the beginning until now. The government's position has always been out-of-pocket expenses minus lobbyists' fees, no lost profits. That position has not changed from the previous bill to this bill. You are talking about the mechanics of how that is to be applied, which is changing.
Senator Lynch-Staunton: No, it is not that simple. I know the position has not changed. But at the time that the position was first stated, there was no court action.
Mr. Desmarais: That is correct.
Senator Lynch-Staunton: There was an argument presented here that the government could do this, namely, that it could establish the rules under which a hearing would be held.
However, since then, the hearing has started. It has been going on now since mid-February, nearly four months. Now the government is saying, "Despite that, let us change the rules anyway." The game is being played right now, and one of the parties to the game is saying, "Change the rules because we do not think we will win unless you follow our own rules."
Mr. Desmarais: I am indicating to you that the rules of the game that the government wanted to play by were established before the court action.
Senator Lynch-Staunton: That is not the point. The point is that the court action has started. How can the government justify changing the rules once a court action has started?
We objected to this before, but there was a strong argument that this could be done, in the same way as we were told that Parliament, dissatisfied with the verdict, can change the verdict. We were also told that, prior to the claim being heard, the government could establish a cap of $1; all this before the court action started.
However, what is the argument for interfering in the court action once it has started and is in process?
Mr. Desmarais: I cannot answer that. I suggest that you direct that question to the justice officials. From my departmental perspective, I do not see this as interference in the court case.
Senator Nolin: It is much more a policy question. It is not a legal position.
Mr. Desmarais: I believe I was being asked a legal question.
Senator Nolin: It is much more than that.
Mr. Desmarais: The government's position is that it is not interfering in the case before the courts at this moment. No one is interfering with the rights of the plaintiffs to put their arguments forward. No one is interfering with the judge. No one is telling the judge how to decide on damages. The government is saying that when the court comes to the point of awarding damages, it cannot award loss of profits or costs for lobbyist fees. That is all this is saying. That is not an interference in the lawsuit, as far as I am concerned. That position has been consistent from December 3, 1993.
Senator Lynch-Staunton: It is an interference in the lawsuit because at the moment the court is hearing a case for lost profits, I assume, and I assume that it is hearing a case for the payment of lobbying fees. Should this be passed, the first thing government lawyers will do is tell the judge that he -- or she -- can no longer listen to this because, if he does, he will not be able to award damages for lost profits or lobbying fees. The judge will say, "You should have told me this before."
This is interference in the courts. It is consistent with the government's policy, but the error is being compounded by the fact that, should this be passed, the judge will be told, in effect, that the rules have changed, that there is no point in him listening to claims on clause 8.(2)(a), (b), (c), (d) and (e), because the Parliament of Canada has decided that he will not be allowed to award damages.
The judge, quite naturally I would think, would say, "How can you do that to this court? We started off with certain guidelines based on certain understandings and traditions of how claims should be heard, and you come here right in the middle of this and say that we cannot do that anymore."
If that is not interference, what is? I should like Mr. Desmarais to answer that.
Senator Bryden: He answered it already. He said very clearly that, in his opinion, this is not interference with the procedure of the courts. Your opinion is that it is. That is fine, but the witness has answered the question.
Senator Lynch-Staunton: I am asking the witness a question, Madam Chairman.
The Chair: Yes, Senator Bryden, Senator Lynch-Staunton has asked a question.
Senator Lynch-Staunton: Perhaps your definition of "interference" is different from mine. However, if what I have stated is accurate, and the passage of this bill would alter the court's appreciation of the damages, that is interference, is it not?
Mr. Desmarais: My contention, senator, is that the plaintiffs have sued for damages in the court. They have not sued for loss of profits; they have sued for damages. This does not restrict the judge from awarding damages. It says that certain classes of damages cannot be awarded, but it does not say that the court cannot award damages. This is only saying what types of damages the government is prepared to pay, by law. It is not an interference in the process.
Senator Lynch-Staunton: In the agreements that Transport Canada signs with private parties in which there is no cancellation clause, is one of the conditions now that, in case of cancellation, lobbying fees and lost profits cannot be claimed?
Mr. Desmarais: That question is very difficult to answer. "No cancellation" clauses relate to real property lease types of agreements which normally, in the government, do not have a cancellation clause. We are talking here about a timing issue. If you have started to operate a business at an airport, and for some reason the government decides to cancel the agreement, you would have the normal range of damages available to you. You have an operating business.
Here we have a timing issue. These people never took possession; they never started to operate this business. Therefore, the government is saying that they should not have the right to any future profits because they never fully established their business. We do not even know if the business would have been viable.
With regard to lobbying, I believe the government listened to Mr. Nixon who thought there was an unwarranted degree of lobbying. That was an opinion expressed by Mr. Nixon. Whether the government took that to heart, I cannot say. Our instructions were not to pay lobbyists' fees.
Senator Lynch-Staunton: Since the government apparently has a thing against lobbyists, and certainly their fees, is it understood in agreements that Transport Canada or any other government department signs which contain no cancellation clause, and where lobbyists may have been involved, that in case of a claim for damages, the claimant agrees not to ask for lobbying fees?
Mr. Desmarais: No, I do not think there is any such understanding.
Senator Lynch-Staunton: Why do you think there would be an exception in this case?
Mr. Desmarais: As I explained, there was direction from the government to bureaucrats to include a "no lobbyist fee" type of clause. The government considered many factors besides Mr. Nixon's advice in making these decisions, but Mr. Nixon did raise the spectre of undue lobbying in this case.
Senator Lynch-Staunton: You followed the Pearson hearings as carefully as anyone. You gave your own assessment of how lobbyists may have influenced you, and of how your colleagues responded. That was not exactly in accord with Mr. Nixon.
You are saying that it is the government's policy and that you are carrying it out. That is right, but you cannot explain the government's policy, which necessitates Mr. Anderson's appearance before us to explain the government's policy.
As I warned earlier, Madam Chair, there are certain questions which Mr. Desmarais and Mr. Baker cannot answer and, even if they have the answers, should not answer because it is not their role to explain government policy, particularly when it has a major political connotation. That is why I urge that you make your best efforts to get Mr. Anderson here at any time that is convenient to him. I am sure that the committee will accommodate his schedule.
I would like to ask further questions on another topic when we have dealt with the amendments.
Senator Doyle: We have been through lobbying, and that has wound up as a question for the minister. Could we have a similar attempt to define "defamation"? What has been the policy on defamation?
Mr. Desmarais: I am trying to find the original clause to see what it said.
Senator Doyle: I should have that before me, but I do not.
Mr. Desmarais: That was originally in clause 7.
Senator Bryden: I believe that clause was included in one of the amendments that flowed from the original bill in 1994.
Senator Lewis: It was not in the original bill.
Senator Bryden: No.
Mr. Desmarais: I am looking at a set of amendments here, and I cannot find it. I do not know exactly what it said.
That was in the December 1994 version, I have just been told, and someone has given me a summary of it which says that under the old clause 8(2), there was a paragraph (d) speaking about any claim for defamation or loss of value of any share, partnership, interest, or investment. Is that the one?
Senator Doyle: That is the one.
Mr. Desmarais: I believe now we are saying that we have taken out defamation and left loss of value of any share, partnership, interest, or investment.
Senator Doyle: That is what I say.
Mr. Desmarais: It has come out. I have no answer off the top of my head as to why it has come out.
Senator Doyle: Was there no policy involved in it?
Mr. Desmarais: The basic policy involved in it at the time was that potential defamation suits were being seen in some of the claims being advanced by the partners and third parties.
My understanding is that under the legal definition of general damages, defamation is covered. If you sue for general damages, you can sue for defamation. The government is saying, "If we have defamed anyone and they can bring a suit on that basis, feel free, and general damages will be awarded as per this act."
Senator Doyle: It did not feel that way before.
Mr. Desmarais: It did not feel that way before; no sir, it did not.
Senator Doyle: That is new thinking.
Mr. Desmarais: It is a bit of new thinking, yes.
Senator Stewart: If you insist, they can put it back in, I suppose.
Senator Doyle: Not necessarily.
Senator Jessiman: Mr. Desmarais, you know that Professor Monahan said that putting in paragraph (e) to do with punitive, exemplary and aggravated damages makes this bill unconstitutional, as far as he is concerned?
Mr. Desmarais: I have heard that.
Senator Jessiman: They only grant such damages when the court is of the view that the defendant, in this case the government, has done something about which the court is pretty unhappy.
Let me tell you what "punitive" means. Punitive damages are awarded to punish the defendant, and to make an example of him or her, or it, in order to deter others from committing the same tort. If the government here is saying, "We do not give a damn what the court thinks. If they think that and they would grant such damages, we will legislate the court out of being able to do that," that is unfair.
Let us talk about exemplary damages. Exemplary damages may be awarded where the defendant's conduct is such as to merit punishment. The purpose of the award is to vindicate the strength of the law, and to demonstrate to the offender, the government, that the law will not tolerate such conduct. That will not be granted unless the court is of that opinion. By asking to prevent the court from awarding such damages, you will not even allow the court the right to even consider it. Is that the policy of the government?
Mr. Desmarais: That is correct.
Senator Jessiman: Thank you.
Mr. Baker: On that one question, I think you will find that the reason for the background is that most of the awards that have been seen in these type of instances are in general damages.
Senator Jessiman: Are you concerned that the court may so find? I would think that the court would so find. Certainly, if I were sitting in judgment, from what I have heard of this case I would certainly be granting those kinds of damages.
Mr. Desmarais: If I could comment, the government made a policy decision to cancel this contract for whatever reason. Are you saying that for every policy decision the government makes, the individual who is affected by that policy decision should have the right to sue for aggravated or exemplary damages?
Senator Jessiman: You do not sue for exemplary damages. You do not need to plead them. You get them. You are allowed them if the court thinks that, under the circumstances, you should get them.
Senator Lynch-Staunton: Senator Kirby, in his presentation of May 15, quoting from page 350 of the debates, said:
... regarding clauses 9 and 10 ... which bar all compensation and give the minister sole discretion to make such payments as he considers appropriate, excluding payments for lost profits and lobbying fees, the Liberal members of the committee will be prepared to move an amendment which will effectively remove these clauses....
as a result of
... the third and last of Senator Lynch-Staunton's original objections.
We do not have those amendments before us. Where are they?
Mr. Desmarais: I think they have been deleted from these amendments, senator. The government's position is that, by allowing this to go to court, there is no need for the Minister of Transport to have the authority to make a payment outside the court system.
Senator Lynch-Staunton: Should there not be an amendment that clauses 9 and 10 are dropped, or whatever the legal term is?
Mr. Desmarais: That could well be. I had not noticed that in your copy. In my copy, they are struck out.
The Chair: It indicates that in our copy as well.
Senator Lynch-Staunton: We do not have the same copies?
Senator Bryden: Once again, that may be because of my lack of familiarity with the procedure. It probably should have been indicated, but my understanding is that the way to deal with that situatuion is that, as you go through clause-by-clause study, when you get to clause 9 and clause 10, you just vote to remove those clauses.
Senator Lynch-Staunton: No. This is haphazard enough. Mr. Desmarais and Mr. Baker did well to discuss legal issues with which they are not too familiar, but now we are being told, "You will get it in good time." We have had amendments tabled. They have all met Senator Kirby's presentation except for 9 and 10. We should have the disposal of 9 and 10 before us today.
Mr. Baker: On that, senator, when you remove 9 and 10 and remove the condition where it was being put in there for the Minister of Transport to make the payment, I think it was felt that this could be done through normal practice, subject to the Financial Administration Act, and that it was not necessary to put it into the bill per se, but that is just my understanding.
Senator Lynch-Staunton: That is my understanding as well, and Senator Kirby's also. For us to drop clauses 9 and 10, we need an amendment before us, and we do not have it.
Senator Bryden: May I please just address that? I have a note here which says that motions are not required to delete clauses 9 and 10. According to Beauchesne, an amendment to delete a clause is not in order, as the proper course is to vote against the clause standing as part of the bill.
Senator Lynch-Staunton: I am glad to see that procedure is being followed. I am not used to that, particularly with this bill. When we get to clauses 9 and 10, will there be a motion to the effect that they be removed from the bill, or whatever the term is?
Senator Stewart: That they not stand as part of the bill.
Senator Lynch-Staunton: Whatever the term is, the end effect will be that if this bill comes to that point, clauses 9 and 10 will not be part of the third reading. Thank you.
Senator Beaudoin: Before I ask my question, do I understand that, in due course, clauses 9 and 10 may disappear?
Senator Bryden: Yes.
Mr. Desmarais: That is my understanding as well.
Senator Beaudoin: You say that, in practice, the amendment to clause 8(2)(e) does not mean very much, if I understood your answer?
Mr. Desmarais: I would not say that, senator. I am saying that most of the awards for defamation or the types of issues where this would arise are generally handled by the courts through general damages, and not through punitive, exemplary or aggravated damages.
All the government says is that if you come before the court with a suit, then you are entitled to general damages.
Senator Beaudoin: If it is included in general damages, to a certain extent, then why do you exclude them here?
Mr. Desmarais: Because the government does not wish to pay them these type of damages, thereby setting a precedent, if you like, when it makes a policy decision that is subject to some type of suit that may come before the court, and the court says, "We do not like the government's decision, therefore, we will award punitive or exemplary damages." That is not what government is all about in this country, senator.
Senator Nolin: That is not exactly what the judicial system is about, either.
Senator Beaudoin: There are three powers in this country. The judicial one is an important one. In this field, the judiciary may say, "You, the government, have made a mistake and are therefore responsible for the damages." The branch of the state which is called the judiciary has the complete right to say that.
Mr. Desmarais: I agree with you, senator.
Senator Beaudoin: Each time we weaken the judicial branch of the state, my first reaction is to say, "Hold on. Do not go too far." We believe in the division of the three powers and in the rule of law. I have full confidence in the judiciary of this country.
In my opinion, this exclusion is a bit strange. To me, there are so many exclusions, as outlined in (a), (b), (c), (d) and (e). The reasons may differ from one to the other. They are not of the same nature. I really do not understand why punitive, exemplary or aggravated damages is in there. It is a policy point of view.
Mr. Desmarais: That is right, it is a policy point of view.
Senator Beaudoin: But it has legal consequences.
Mr. Desmarais: That is correct.
Senator Stewart: I should like to comment on what Senator Beaudoin and the witness have said. I do not think we should think of this simply as a government policy. We have here a government view which is being placed before the two Houses of Parliament. It is not the government which is establishing the conditions under which awards for damages will be made; it will be Parliament. Otherwise, why are we here?
Senator Lynch-Staunton: Mr. Desmarais and Mr. Baker, can you give us some details on the lease arrangement with the Greater Toronto Airport Authority which was announced just a few days ago?
Mr. Desmarais: Not really, senator. I have not been privy to that lease. I know it was signed on Friday, after having been approved by Treasury Board. That is all I know about it.
You are right in your statement that they will take possession in December. There is a transition period for employees, and so on. That is all I can tell you.
Senator Lynch-Staunton: There was a great deal of criticism of the fact that Pearson Development Corporation was entitled to deferred rentals. You will remember the discussion we had here.
Mr. Desmarais: Are you referring to the $11 million and the $33 million figures?
Senator Lynch-Staunton: Yes, whatever it was. That was one of the so-called flaws which my friends opposite and their colleagues in cabinet found in the Pearson agreement to justify its cancellation.
By chance, I received last week the 1995 annual report of the Montreal Airport Authority, which includes Mirabel and Dorval. In it are contained some details of their lease with the government. They have in their lease a five-year deferred rent of up to $6 million a year, with the obligation to repay the loan after five years at a rate based on Government of Canada bonds, plus 2.5 per cent. The government sharply criticized this kind of arrangement in the T1T2 lease, yet it has accepted it for Montreal on practically the same terms. I understand other airport authorities also have a deferred rent clause. Why would the government object so violently to having what is made available to airport authorities not being made available to private enterprise?
Senator Bryden: I should like to ask what relevance this has to the matter before us and whether, indeed, it is fair to the witnesses. Did they come here prepared to deal with a revisiting of the Pearson inquiry?
Senator Lynch-Staunton: As I understand it, Mr. Desmarais was asked, and agreed, to talk about policy. This is policy. This is a policy of the government on airport authorities. The Minister of Transport should be the one do answer. He refuses to come before us. It is to be hoped that, with your letter, Madam Chairman, he will reconsider.
In any event, Mr. Desmarais and Mr. Baker are the only Transport officials we have listed to appear before us so far. Just to get an understanding of the airport policy of this government, since we are talking Pearson, I would like to know why what was not considered acceptable in a lease with a private party appears to be a standard provision in leases with airport authorities.
The Chair: With the greatest respect, Senator Lynch-Staunton, we are focusing on a particular bill. To broaden this discussion to include discussions of the way in which airport authorities are set up across this country is not relevant to the discussion of the bill.
Senator Nolin: Madam Chair, they cancelled the agreement. My question is: Why? Perhaps an answer to Senator Lynch-Staunton's question would shed some light on that "why".
Senator Lynch-Staunton: The crux of the matter is that we are talking about the cancellation of contracts. What we have been told since is that key provisions in the contract which was cancelled are being incorporated in agreements with airport authorities. If the key provisions were so reprehensible in a private contract, which we are asked to cancel through this bill -- and that is the relevancy -- why are these same provisions acceptable between an airport authority and the same government which did not like them, and does not like them, elsewhere?
Senator Bryden: Throughout proceedings over the last two years and so on, as I understand it, the right of the government to cancel this contract has never been questioned by the other side. That has been stated repeatedly in the proceedings. If they had the right to cancel the contract, why do we now need to go behind that and try to find out what were the reasons? It seems that you are changing your ground yet again.
Senator Nolin: We do not argue the fact that the government is allowed to cancel the agreement. We do not argue with that at all. Our view is that any owner who cancels a contract will have to face the consequences of his decision. We do not argue the fact that they are allowed to do it. They are. Anyone can cancel a contract, as long as they face the consequences.
To evaluate those consequences, you have to evaluate why they were cancelled. Perhaps you had a very good case for cancellation. We still do not know why the government cancelled. That is why we are putting this question to the government as a policy matter. That is why this question is very relevant.
Sen. Lynch-Staunton: The point was made, and your assertion that you did not want us to go behind the cancellation is also very revealing. Can you answer why deferred rentals which were not acceptable in the T1T2 agreement are part of the government's policy in airport authority agreements?
Mr. Desmarais: Senator, the agreement in Montreal and, I believe, the agreement in Edmonton have rental rate deferral clauses. I am not sure there are any others. Those were signed prior to the Pearson agreement. The Montreal agreement, I believe, was signed in 1992. The Edmonton agreement was signed in July or August of 1992, I believe. The Pearson agreement was signed in January of 1994, roughly a year and a half later. We used the local airport authority models to model our deferral clause which was acceptable to the government at the time.
The new government coming in decided that those models were not acceptable, on the basis that we had given it to the private sector, which was an equity investor. The LAAs are not equity investors in an airport. They come in with no equity. These individuals were supposed to come in with adequate equity to fund their development. Those things played a part in the government's decision; how big a role in the government's decision, I do not know.
Senator Lynch-Staunton: Do I understand that there are no deferral clauses under the present government's policy?
Mr. Desmarais: As far as I know, senator. I have not seen one but I have not seen any of the new agreements. I believe the only major agreement which has been signed under this new government is the Toronto agreement, and I have not seen that one.
Senator Lynch-Staunton: Do you know if there is a cancellation clause in this agreement?
Mr. Desmarais: I do not believe there is a cancellation clause.
Senator Lynch-Staunton: That issue was also faulted. Do you know if this is a long term lease? Is it a 60-year lease?
Mr. Desmarais: It is a 60-year lease.
Senator Lynch-Staunton: That was not acceptable in the case of T1T2.
Mr. Desmarais: Senator, you are making an assumption that it was not acceptable. You are making an assumption that Mr. Nixon's report was taken and used as the only basis for the government's decision.
Senator Lynch-Staunton: It was, sir.
Senator Nolin: That is what we were told.
Mr. Desmarais: The government's decision, as far as I am aware, was made in cabinet. What they considered at that meeting, I cannot tell you. However, one of the items they would have considered was Mr. Nixon's report which they released. What else they considered, I do not know. I am not privy to cabinet meetings.
Senator Doyle: Nor are we.
Mr. Desmarais: You are making an assumption that Nixon was the only basis. I cannot make that assumption.
Senator Lynch-Staunton: If you allow me, I can quote to you from the proceedings of the House of Commons where Mr. Young stated:
The government decision to cancel the contract for the Pearson International Airport was based on our assessment of the situation, which was confirmed in the report prepared by Mr. Nixon.
Mr. Desmarais: If he is using Mr. Nixon as confirmation of something that they had already found out, then some other information was in hand.
Senator Lynch-Staunton: I do not want to get into an argument on the validity of the Nixon report, but you have just said that the impression was already made, and that they needed someone to give it some respectability.
Senator Stewart: That is a gloss.
Sen. Lynch-Staunton: Nixon is a gloss?
Senator Stewart: No. Do not be silly.
Senator Lynch-Staunton: I was about to say it was a whitewash. Perhaps "gloss" is more parliamentary.
The Chair: I do not think that is an appropriate reflection of what Senator Stewart said. Do you have an additional question, Senator Lynch-Staunton?
Senator Lynch-Staunton: Mr. Desmarais has not seen the Toronto lease. They do not want to show it to us, so any other questions would be superfluous on that topic. Perhaps if Minister Anderson were here, he could explain things to us.
Senator Nolin: Deducing from the answer which you just gave to my colleague, what was the reason for deciding to cancel?
Mr. Desmarais: I cannot tell you, senator. Again, that was the subject of a cabinet debate. I was given the decision, after that cabinet debate by the minister, that the agreements would be cancelled.
Senator Nolin: If the former Minister of Transport referred to Mr. Nixon's report as the confirmation of other assumptions or deductions or examinations or reports or documents that he had as Transport Minister, are you aware of those other documents or reports or evaluations?
Mr. Desmarais: I am aware of what we presented to him as departmental bureaucrats. I believe that, during the inquiry process, you would have seen most of the documentation which we presented to the minister. Basically, the November 4 briefing note was the main item he had from us and from the department. I am not privy to any other discussions or material he had.
Senator MacDonald: I just wished to make it clear on behalf of my colleagues that we have known Mr. Desmarais now for a long time. We have known him through the legal and constitutional hearings. We certainly knew him through the Pearson inquiry last summer. We have an unlimited, unbounded respect for Mr. Desmarais, for the way in which he handled himself before that inquiry, and for the straightforward and forthcoming way in which he presented his evidence. We also admire him for the way in which he has explained and defended the government's position as bureaucrats are paid to do. He has done it in a first-class fashion.
I must agree with Mr. Desmarais when he indicates the freedom which must be allotted to the presiding judge in the Ontario General Division at the present time. We know that that judge is impeded in his or her decision because of the exclusions that the defendants have instituted.
This is a political matter. We are coming to the end of it now. The political constraints that usually exist depend upon the short-term calculus of political officials as to whether the costs of contract repudiation outweigh the benefits. That includes political benefits as well as other benefits.
Politicians, as opposed to judges, have a clear interest in the outcome, since the state stands to benefit financially if it successfully skips out of a contract. This is straight case of a judge and his own cause. We are under no illusions.
Senator Bryden: We will not conduct a debate with you on that.
Senator MacDonald: Just do not assume that our blue eyes here are completely oblivious to what is going on, or to the outcome that this committee is taking. I wanted to make clear our admiration for Mr. Desmarais.
The Chair: Thank you, Senator MacDonald. Those comments are well-founded.
Senator Lewis: Perhaps the Justice Department witnesses must answer this question: In the amendment to clause 7(2), it says that no relief may be granted against any minister or any servant. Who is covered by the word "servant"?
The Chair: This is under the immunity clause.
Mr. Desmarais: Yes, I read it in clause 7(2). "Servant" would mean a public servant or an agent of the Crown versus a contractor.
The original bill said:
...may be instituted by anyone against Her Majesty, or against any minister or any servant or agent of Her Majesty, or any person engaged to provide advice or services...
That has been moved around a bit in these clauses, so we are now talking about basically public servants and the minister.
Senator Lewis: Could we have confirmation of that?
Mr. Desmarais: If you talk to the Minister of Justice or to witnesses from the Department of Justice, they will be able to confirm that more specifically.
Senator Nolin: On this specific amendment, your proposed amendment does not totally replace clause 7. You have kept the last lines of clause 7. When Senator Lewis referred to "servant", the sentence does not stop there. You suggest that we keep:
...or agent of Her Majesty, or any person engaged to provide advice...
That part of the bill we keep?
Mr. Desmarais: That is correct.
Senator Nolin: In French, "servant" is "préposé," and means an employee?
Mr. Desmarais: Basically, yes.
Senator Nolin: That is what it is.
Senator Lewis: Yes.
Senator Nolin: You keep the latter part.
Senator Lewis: It is only to line 39. That clarifies things.
The Chair: Are there any other questions of these witnesses this morning? Hearing none, the committee stands adjourned.
The committee adjourned.