Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 18 - Evidence for December 8, 2010
OTTAWA, Wednesday, December 8, 2010
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill S-12, A third Act to harmonize federal law with the civil law of Quebec and to amend certain Acts in order to ensure that each language version takes into account the common law and the civil law, met this day at 4:08 p.m. to give consideration to the bill.
Senator Joan Fraser (Chair) in the chair.
[English]
The Chair: This meeting of the Standing Senate Committee on Legal and Constitutional Affairs is continuing its study of Bill S-12, a third act to amend federal law with the civil law of Quebec and to amend certain acts in order to ensure that each language version takes into account the common law and the civil law.
[Translation]
Today it is our privilege to be hearing from Mr. Patric Besner, representing the Quebec Branch of the Canadian Bar Association. We will also be hearing from Mr. Stéphane Rousseau, who is an associate professor with the Faculty of Law at the Université de Montréal.
Gentlemen, thank you very much for agreeing to help us with our work. Mr. Besner, please proceed.
Patric Besner, Representative, Canadian Bar Association, Quebec Branch: Madam Chair, the Canadian Bar Association represents some 37,000 members all across Canada. Its membership includes notaries, judges, students and, of course, notaries practising in Quebec in particular.
Today I am here representing the Quebec Branch, which is comprised of 24 separate sections, including the business section which is more directly concerned with this bill. As far as consultations are concerned, the bijuralism team obviously began them some time ago. In terms of public events, I had the privilege of attending the launch of Thémis. By its choice of authors, it is a fairly significant initiative in terms of the contributions. I have a copy here with me today.
The federal government helped to ensure that both the data and writings of certain authors would be available, including those of my colleague, Professor Rousseau. There were also a number of other leading authors, including Paul Martel and Mr. Payette. This was an opportunity for the community to become more aware of the need to review bijuralism-related issues.
The launch took place on February 20, 2008. At the time, a consultation paper had been prepared by the bijuralism team. In April of the same year, Professor Stéphane Rousseau organized a round table through the Université de Montréal which brought together a number of practitioners, professors and students. There were also officials from Industry Canada in attendance.
On October 13, the CBA organized a meeting of federal and provincial government officials with respect to corporate issues, and the bijuralism team was present for part of the discussion. I would like to provide you with some of that background, which you may be aware of, if only to emphasize how important this process was, particularly for practising lawyers, as they often have little time available because of their practice.
And when governments put procedures in place whereby we are able to engage in discussion with drafters or with the people who ultimately make the decisions in terms of suggesting legislation, the result is legislation that is far more effective and that deals equally with policy and practical issues. We feel it is absolutely necessary to maintain that approach to legislation.
With respect to Bill S-12, the CBA obviously looks on it very favourably and considers the suggested amendments to be appropriate. It is also of the opinion that the analysis and discussion in that area were adequate and that there is no problem per se with the bill.
On the contrary, I believe it had been expected for some time and that every province — not only Quebec — should look very favourably on this bill. Sometimes it may be difficult for people to understand the need for harmonization, but it is important to realize that there is French common law and that these legal concepts are part of it, something that benefits both Quebec and those provinces that apply the common law. That is a factor that must be borne in mind.
It is also a way of respecting provincial traditions within federal legislation, and I see this as an important approach. One suggestion the CBA would like to make to the bijuralism team is that the same approach be used as in the Dickerson report. In the 1970s, a number of university professors and practising lawyers developed a draft bill that resulted in the Business Corporations Act, which came into force in 1975.
This is a legal document that contains a large number of references and many lawyers consult it regularly, even today. The same applies to the amendments passed in 2001. There was a significant amount of preparatory work, as well as a list of specifications. These are documents which we use regularly in our practices.
It is important to understand that for practising lawyers and business people, the most important thing in business is certainty. If there is no certainty with respect to the law that applies, even though that may seem trivial, it can result in huge problems and mean that certain business transactions may be done differently and that tax costs are higher because of the need to avoid a problem with the legislation.
By way of conclusion regarding specific idea, an appropriate action on the part of the bijuralism team would be to prepare a document explaining the different amendments that are proposed in Bill S-12.
I do not know whether such a paper would be made public, but it would be extremely valuable, because of some highly technical issues. Because practice is evolving quickly, lawyers need to be able to refer to a document that allows them to understand why the term "mandatary'' appears in one place or why the word "sequestrator'' is used somewhere else. There are subtleties attached to these terms and it is difficult for a practising lawyer to take the time to analyse them section by section.
If such a document were available to both the legal and business communities, I believe it would be frequently used and very much appreciated. It would also be useful for the courts to be able to refer to it where there is a need to interpret the legislation. So, if I am associating this need for certainty with the amendments, I can tell you that for many years now, practising lawyers in Quebec have understood this, because that was already our interpretation. However, with the amendments that are now being made, an explanatory paper would give us greater comfort, as well as some certainty with respect to our practices and the legal opinions we are regularly called on to provide in our work.
In closing, the Canadian Bar Association had the benefit of attending the various meetings I mentioned initially, and is in favour of these amendments.
Stéphane Rousseau, Associate Professor, Faculty of Law, Université de Montréal, as an individual: Madam Chair, I would like to begin by thanking you for your invitation and for taking the time to hear my comments this afternoon.
I would like to make two types of observations with respect to Bill S-12: first, some general observations, and after that some more specific comments about the bill.
My general comments are that I am wholeheartedly supportive of the harmonization and review process which is part of the legislative bijuralism initiative out of which Bill S-12 has emerged.
This program and the work associated with it are extremely important and relevant in at least two respects — first of all, because they allow us to gradually develop legislation that reflects our two legal systems, the common law and the civil law, in all federal legislation and in both official languages. In so doing, they ensure that federal legislation is accessible to everyone throughout the country, based on both legal systems and in their preferred official language. I believe that to be extremely important.
Obviously, from Quebec's perspective, this review is even more important, since we are the only province with a civil law tradition. That creates a prime imperative in terms of ensuring that federal legislation is reviewed and updated.
In that respect, there is no doubt whatsoever that the review program plays a very important role.
Secondly, I would be remiss if I did not also mention the fact that the work carried out since the early 1990s under the legislative bijuralism initiative has improved and enriched our knowledge with respect to our own legal systems. From the standpoint of the history and substantive law, we have had the benefit of work carried out by academics, federal officials and professional associations, as a result of which we gradually came to be better acquainted with our own law, which is very valuable and is certainly a benefit worthy of attention.
In that respect, I can hardly ignore the very important role played by the Université de Montréal, as soon as the bijuralism program was introduced, in terms of supporting the process of reflection through in-depth studies, something which gradually resulted in laws now in effect.
I think the program should also be commended for its role in stimulating intellectual activity, something that it continues to do. It is our hope that it will continue to be highly topical.
At the same time, it is important to underscore the excellent work carried out throughout that period by officials at the Department of Justice responsible for directing the reviews of various pieces of legislation.
Those are the general comments I wanted to make with respect to the bijuralism program.
Thirdly, I would like to comment on the bill itself, and particularly on the corporate law side of the bill, primarily because that is my area of expertise, and also because it was at the centre of the reforms that ultimately had ramifications for specific statutes.
With respect to that second area, I believe it should be emphasized that the review of the Canada Business Corporations Act was particularly relevant. Why? Because our federal legislation relating to business corporations was inspired by British and Anglo-American laws, if I can use that expression. The decision made in 1975 to use a modern Anglo-American model has served us extremely well, providing us with legislation that is both flexible and protects shareholders and the different parties. So, the decision to opt for the Anglo-American and British approach was a very positive one.
On the other hand, the choice of that model does raise certain interpretation and enforcement issues — particularly from the standpoint of the civil law — since we built our business corporation legislation on an Anglo-American, common law tradition-type model.
A great deal of work has been done to try and mitigate those interpretation and enforcement issues. To begin with, work was done to try and clarify the suppletive law in the area of federal corporate law. Looking back at the major milestones, in 1994, Quebec undertook to clarify the role of the Civil Code suppletive law dealing with the rights of corporate bodies and business corporations. As you may recall, in 2001, the Interpretation Act was amended by section 8.1, which provided a formal basis for the suppletive role of the Civil Code. In 2004 and 2006, there were Supreme Court rulings which noted these choices and gave effect to the suppletive role of the civil law, a suppletive role which, previously, was already present but was formalized through these legislative amendments.
With respect to the other problem area — enforcement of the law itself — there again, progress has been made. This time, section 8.2 of the Interpretation Act specified that the law is to be interpreted and enforced in relation to the legal system in place where one happens to be, thereby conferring a meaning compatible with the civil law and the common law, depending on what is applicable. However, there had been no systematic study of how the federal legislation should be understood and applied until now. There had been no systematic study either of the issues and areas where improvements were needed. It was therefore with that in mind that the bijuralism team began its work — work that was extremely timely. So, that was relevant background information in order to highlight the importance of this initiative, one that gave rise to Bill S-12, and that can be explained by the special characteristics of federal corporate law — thereby creating a need to ensure the proper harmonization with the civil law in this case.
As my colleague Mr. Besner pointed out earlier, the review of the Canada Business Corporations Act was carried out with a high degree of concern for transparency and consultation by the bijuralism team. There again, it is important to commend the team for its work, work which made it possible to carry out in-depth studies upstream on certain matters that could cause problems and which gradually led to consultations and a process of reflection with interested parties.
Having had the privilege of following this work, I must say that it has been carried out with the utmost seriousness and with a desire to make allowances, in order to arrive at a bill and amendments that would be suitable and respond to the specific problems that had been highlighted. Because that is the challenge; the idea is not to reform substantive corporate law, but rather to carry out reforms with a view to harmonization. The consultation work that was done really resulted in a bill that met that objective — in other words, recommendations and amendments dealing with specific points that were causing problems.
In that respect — in terms of the process, in other words — I think we have every reason to be delighted with the quality of the bill, as well as the result.
Perhaps I could just make a couple of final comments with respect to the bill itself, since it is quite technical, as I am sure you realize. It is difficult to work up much enthusiasm for a bill like this, unless you happen to be a corporate law professor. That is quite true. Pardon my enthusiasm, but I believe that this bill, although it is technical, is an accurate reflection of the fact that the bijuralism team did its job properly. It reflects the fact that we wanted to resolve specific issues and do so in a way that would not affect the current state of the law. And, having looked over the amendments overall, it is clear that there are some difficult issues that arise.
First of all, we wanted to ensure that the language used in the federal statute is properly integrated into the civil law when it comes to real security, using the appropriate terms, such as the term "hypothec.'' There is an amendment which, despite its cosmetic appearance, since it is a minor one, is extremely important in terms of building a bridge with the civil law when it comes to security.
Secondly, with respect to trust indentures, which can be found in clause 42 of Bill S-12, the fact that the concept of "administrator of the property of others'' is reflected in the Business Corporations Act and all other statutes that take their inspiration from it, is extremely important. That means that we can rely on the regime set out in the Civil Code with respect to an administrator of the property of others, in order to understand the role of the individual who will be acting under the trust indenture. Otherwise, the temptation would be to say that because we are dealing with a fiduciary, we will instead rely on the common law fiduciary duty. It is a minor change, but one of great importance in terms of making that connection with the civil law.
The third series of amendments found in clauses 44 and following of Bill S-12 relates to sequestrators. It is interesting to note that the sequestrator regime was established in 1975 based on a desire to harmonize provincial law, but without incorporating provincial common law. We had not introduced a sequestrator system, based on what was going to happen under the civil law. With the proposed amendments, we have ensured that the system will work properly with the sequestrator system under the civil law and the Civil Code of Procedure.
My intention is not to analyze every provision in the bill, but rather to highlight the fact that behind a number of very specific and highly technical terms that can be found in these provisions are important choices with respect to harmonization. Those choices fulfil the goal of harmonization and will result in legislation which jibes well with Quebec civil law. However, in spite of the rather technical nature of the bill, I believe it is important that we understand the importance of the amendments being made.
In closing, I would just like to repeat that, while it is technical, this bill is of tremendous importance. It is the result of rigorous work on the part of the bijuralism team. It is appropriate to call attention to the process because of its quality and openness. We can only hope that this work will continue with respect to other legislative regimes. That is my deepest hope with respect to harmonization.
I would now be pleased to take any of your questions in both official languages.
The Chair: Before turning it over to my colleagues, I would like to address a few points.
We were given an extraordinary document prepared by the department. We will show it to you after the committee meeting. Mr. Besner, you can tell us whether this is the kind of thing you were talking about. I must say that it has been valuable to us.
Mr. Besner, when you refer to the common law in French, I assume you are talking about our common law as expressed in French, are you not?
Mr. Besner: Yes.
The Chair: One senator heard the expression and indicated that there is no common law in France. I just wanted to clarify that.
Mr. Besner: We are talking about the common law in French. It does use specific terminology and it is important to keep in mind these traditions.
The Chair: I agree. I simply wanted to clarify that we are in fact talking about our law.
Mr. Besner: Yes, indeed.
The Chair: In the harmonized version, two terms are used in each version: one term to express the common law concept, and another to express the Civil Code concept — in both languages. In the English version, the common law expression comes first, followed by the Civil Code term. In French, it is the reverse: the Civil Code term comes first, followed by the common law term.
Do you think the fact that the order is not the same could pose a problem in terms of interpretation?
Mr. Besner: For someone who is not used to reading legislation — for example, a fellow Canadian who has no legal training — it might be more difficult to understand. That is why I said earlier that an interpretative document could be of some assistance in that respect.
In practice, it is not a problem. On the contrary, it is perfectly logical. Indeed, I have to commend the bijuralism team at Justice Canada. In my opinion, the work they have done over the last 10 years has been absolutely outstanding. They have introduced solutions and from the standpoint of a practising lawyer or even a university professor, reading these documents is really wonderful.
It is really a question of habit and expertise. Respect is shown for the legal traditions. Federal laws apply in all the provinces. However, civil law is something that falls within the purview of each individual province. In the United States, the issue does not arise. Laws there are very strictly compartmentalized. In Canada, I think it is really quite wonderful that we have been able to respect each of the provinces, in legislative terms, while at the same time retaining two systems which, historically, have often taken different approaches to different issues. In my opinion, bringing all of this together in a single piece of legislation is a real feat on the part of the legislative specialists who manage to do this kind of drafting.
For a practitioner, the issue does not arise. There is a method and a way of understanding the legislation which is perfectly appropriate in that respect.
Senator Carignan: I have been a senator for a little more than 12 months now, and I have rarely seen such unanimity with respect to a bill. You even talked about a legislative wonder, which is saying quite a lot.
Have you identified any elements that could be problematic or flaws that we should consider correcting? Since you are practitioners, you may not have had the time to look at every single clause. Have you identified any elements that could be problematic?
For example, there are some clauses in French where it specifically says "au Québec.'' Clause 45 refers to section 96. When you compare the English version to the French version, it is clear that the latter is far more succinct. In the French version, it says:
Les administrateurs ne peuvent exercer les pouvoirs conférés, au Québec, au séquestre ou ailleurs au Canada, au séquestre-gérant nommés par le tribunal . . .
So, there are several places in the bill where reference is specifically made to Quebec, which is quite unusual in a federal bill. Is that something that could be a problem? Or, on the contrary, is it an amendment that should be incorporated in future to make the wording more precise?
Mr. Besner: As regards the expression "au Québec'' or "elsewhere in Canada,'' these terms have the merit of being clear. I talked about the importance of certainty for practising lawyers. The lawmaker's intent is clear. In Quebec, that is the system in place and the concept that has to apply in Quebec. Elsewhere in Canada, this is the concept. So, we see this as a very positive approach which poses no problem whatsoever.
On the other hand, the other provinces may be wondering: is there a benefit? That is perhaps the only question that could arise. Will the other provinces benefit from this terminology? But from Quebec's standpoint alone, saying this is the term used "in Quebec'' or "elsewhere in Canada'' is extremely beneficial.
However, I would like to raise one point regarding the spirit of this harmonization — not about the bill per se, since it deals with technical issues. Amendments are needed to the substantive provisions of the Canada Business Corporations Act.
One example would be what are called "pre-incorporation'' contracts; under the legislation as currently worded, any person carrying out a transaction prior to the incorporation of the business is required to follow a process whereby the company could ultimately be liable, releasing the person who purported to act in the name of or on behalf of the corporation.
However, the civil law process only deals with written contracts. Therefore, an individual who had entered into a verbal agreement would not benefit under what are known as "pre-incorporation'' clauses and be released from responsibility. In the spirit of harmonization — I realize that this was not the mandate of the bijuralism team; their job was to make amendments that dealt strictly with the substantive provisions of the act. I also know that it recently stated that, over the next two years, consultations will be held to look at the possibility of amending certain provisions of the Canada Business Corporations Act.
So I would just invite the bijuralism team and practising lawyers to note the kind of amendments that are required and to proceed with substantive amendments which are important in the act itself, in order to abide by civil law traditions to an even greater extent. That is important. But the current framework of the bill really focuses on amending what is now in place in terms of technical issues.
Another example within that same framework is the chapter on security transfers; in recent years, each of the provinces has passed legislation on security transfers. Historically, under the Canada Business Corporations Act, there was a framework in place for the transfer of shares. Now there is some duplication out there. Transfers of these kinds have much more to do with civil law, but historically, back in about 1975, this was something new, and it was important to have it in place. We believe that the next time the Canadian legislation is overhauled, it is likely that some sections, or perhaps even whole chapters, will be removed. Provincial governments have now passed their own legislation which covers the same area.
That is another example where I think there needs to be a second stage to this process. Does that answer your question?
Senator Carignan: Yes, I understand you to be saying that in terms of what the harmonization act was trying to accomplish, the goal has been met. In other words, some improvements are being made to reflect the special features of the civil law and you believe that, if further improvements are needed, they will be substantive improvements to the legislation, outside of this particular framework, as is the case with many statutes. It will always be possible to improve it.
Mr. Besner: Well, those changes really must be made in keeping with the desire to respect the two systems of law, the common law and the civil law.
Senator Carignan: Do you have anything to add?
Mr. Rousseau: I pretty well share Mr. Besner's views. I would just like to add something with respect to the reference "au Québec.'' I think it is a good way of avoiding the dangers of deceptive cognates. Where language is concerned, this problem often arises. People think an English word means something in French and vice versa. By using that technique, you avoid that risk, because the term may have one meaning in English and French under the civil law and the common law, but there may be some ambiguity in terms of how to interpret it.
In my view, if this is done only where it is absolutely necessary and it is not abused, then it is a technique that can be appropriate, even though I realize it makes the text harder to read. I would add, just in response to a comment made by the chair, that that is also how I saw the technique of starting in French, giving the civil law term, and then in English, with the common law term. That way you avoid the instinctive reaction of looking for the synonym in either French or English. In my opinion, it is a clever way of ensuring that you focus on the wording and ensure that you are dealing with either the civil law system or the common law system, in English or in French.
I believe that substantial reforms will be undertaken by Industry Canada as part of the upcoming review. If there was so much unanimity, that is probably because the choices that were made in this reform were neutral. The law itself has not been changed. That was the goal. If the law had been changed, there would be more of us saying that there were problems with these reforms. I think that is probably a good sign, in a way.
Senator Carignan: I understand that the results of your discussions in the joint committee involving practising lawyers, academics — In other words, that committee's consensus is what is reflected in what you have been saying today. Was that also the consensus within the committee itself?
Mr. Rousseau: I am only speaking on my own personal behalf today, but my own take on the work that was done and the result, is in terms of their neutrality, and that they will not be controversial when the legislation comes into force.
We will end up with something that reflects what we were looking for in terms of how the Business Corporations Act is applied in Quebec under the civil law. I think that is what is being done now.
The Chair: Senator Carignan, if you do not mind, Senator Joyal has been waiting for a while now. If we have time, we will come back to you.
Senator Carignan: I got carried away.
Senator Joyal: Welcome gentlemen, and thank you for taking the time to share your knowledge of the bill with us today.
Were you involved in preparing the first and second harmonization bills which the Parliament of Canada passed previously, or is this the first time you have been involved in the harmonization process?
Mr. Besner: Well, as a practising lawyer, I obviously monitored the work undertaken in those two cases, even though I was not involved in the preparatory work. And sections 8.1 and 8.2 of the Interpretation Act were very welcome. So, I did follow the process as a practitioner, but I was not directly involved.
Senator Joyal: In the design.
Mr. Besner: In the design, but my understanding was that the work done, particularly in the first phase of the project, was quite avant-garde and innovative.
Mr. Rousseau: It is the same for me. I became involved in this work as a result of my expertise in the area of corporate law which, as I explained earlier in talking about the background to this, necessarily had required that I be constantly navigating between the civil law and the common law in order to apply the federal legislation and understand the federal Business Corporations Act; so, I was naturally interested in it. But my involvement began with the work that ultimately resulted in Bill S-12.
Senator Joyal: The team you put in place at the Université de Montréal, at the Faculty of Law, was an ad hoc team developed for this particular bill, I imagine; it was not the team that could eventually be called on to help develop the fourth harmonization act? If you read the testimony of Justice Department officials, you noted that we tried to find out from them what the next stage would be. I understand that the professors or academics at the Faculty of Law who were involved had specific expertise in relation to the overall goal of this particular bill, which dealt primarily with corporate law.
Mr. Rousseau: The only nuance I would add is that we have a long standing tradition of expertise in that field at the Université de Montréal. We have work going back to 1995 and 1996. The late Professor André Morel worked extensively on this; my colleagues, Jean-Maurice Brisson, Jean Leclair and others have also worked on it over the years, right from the first attempts at bijuralism and the work that followed. So, this is, has been and continues to be an area of expertise at the Université de Montréal. I believe the work that was done on the Business Corporations Act did in fact involve people working on an ad hoc basis, but at the same time, there is expertise in that area that has been built up over the years and could be called upon again, if there was a need.
Senator Joyal: So, your work is completed, but this is goodbye, and not farewell.
Mr. Rousseau: Yes, you could put it that way.
Senator Joyal: For a future fourth harmonization bill, do you consider that your previous experience would be useful in developing the next stage?
Mr. Rousseau: Absolutely.
Senator Joyal: To your knowledge, were other universities in Quebec involved in this broad consensus process? I wanted to come back to the consultation stage that Mr. Besner referred to at the outset, and particularly the consultation paper. Who received the consultation paper?
Mr. Rousseau: It circulated amongst a very long list of law professors — those specializing in corporate law as well as professors with an interest in comparative law or the fundamental aspects of legal interpretation. There was a very long list of individuals who received the material. The fact that it was published subsequently with wide circulation allowed both professionals and academics to examine it. So, the consultation occurred both physically, with individuals sitting together, and virtually, in the sense that the work was very broadly disseminated through the different channels we are all familiar with now.
Senator Joyal: So, all the universities with an interest in the subject in terms of their professional expertise — I am talking about faculties of law — were asked to participate or submit their own suggestions or thoughts in relation to the bill's objectives?
Mr. Rousseau: Absolutely, and that is exactly what happened with the previous bills. On the matter of bankruptcy, for example, we had colleagues from Sherbrooke, Laval University, the Université de Montréal and McGill who were all involved. It really was a very open process, and among academics in Quebec, there are really so few of us in our different areas of expertise that we naturally consult one another and discuss this type of initiative.
Senator Joyal: Mr. Besner, could you tell me whether the Canadian Bar Association also has a committee looking more particularly at the goals pursued by the legislation aimed at harmonizing the two systems?
Mr. Besner: There are several different structures. First of all, at the national level, and also at the provincial level, in Quebec, we have a legislation committee; I sit on that committee as well as the corporate law committee as director of legislation. One of my duties is to monitor amendments at both the provincial and federal levels that could affect the business community, more at my level.
In a fourth phase — for example, if it dealt with the tax or banking legislation, and the corporate law section is not directly affected — we have some 24 different sections in Quebec, that deal with taxation, corporate law, banking and financial institutions, and so on — so it is relatively easy for us to bring together practitioners, experts and academics to monitor the work being done on these bills.
One important comment I would make, particularly as far as practising lawyers are concerned, is that when consultations are held where we must appear in person, there is often very little advance notice given. We realize that the political agenda is very full, but for a lawyer in practice, it is often very difficult to make oneself available, prepare adequately and actually come in person. In some cases, with respect to certain bills, I have seen that there were opportunities for us to make a contribution, but unfortunately, because of a lack of time, legal practitioners were unable to submit their ideas. In the case of Bill S-12, there was plenty of time, and I believe the process was very well organized and effective.
But, with certain bills, we are sometimes only advised several days in advance. For the Canada Business Corporations Act, for example, we were given a week or 10-days advance notice — I believe it was to appear before the Senate committee. Everyone was trying to find their notes in order to figure out what needed to be said in terms of applying pressure and suggesting amendments to the act. Those are not necessarily the best conditions under which to be doing that.
Senator Joyal: At the beginning of the meeting, you referred to a consultation paper; could you, very briefly — I am looking at the clock, because the bells are going to ring at 5:15 for a vote — tell us what essential points were addressed in the consultation? What did the consultation deal with?
Mr. Besner: The consultation dealt with the different acts being examined under this project, and particularly the Canada Business Corporations Act.
There was an initial chapter which presented series one, and series two, setting out the case law where there was detailed follow-up by the courts.
Senator Joyal: In other words, where they applied section 8.1.
Mr. Besner: Exactly; it covers several pages and was presented section by section, somewhat like Bill S-12, where you see the English and French versions and the changes made to each. A certain number of sections were addressed in the consultation, but were not reproduced in Bill S-12. There is really nothing in particular to point to; we do not see any issues with it.
Senator Joyal: Were those sections not dealt with because it was felt there was no need to do so, and that there was no possible ambiguity?
Mr. Besner: It was probably out of a desire to limit the number of legislative amendments. I have had quite a bit of contact with members of the bijuralism team; to my knowledge, one of the reasons was along the lines of "it would be nice to have this, but it is not an absolute necessity''; I believe it was more from that perspective that it was considered.
Senator Joyal: Professor Rousseau, do experts like yourself, in the area of corporate law, for example, get together to suggest a proposal, or do justice department officials receive individual suggestions, and then proceed to analyze them and eventually select one? How does the process of homogenizing the suggestions work and result in the proposal we have in front of us today?
Mr. Rousseau: It is a mixture of the two. Some academics are in the habit of working collaboratively — for example, because they are already writing and working on certain projects; I am thinking of my colleague, Raymonde Crête, who is a professor at Laval University and the coauthor of our treatise. We are obviously in constant communication about developments affecting the legislation or the case law. So, we can easily put forward a common view. There are other colleagues whom we have less contact or do not always agree with — and that is a good thing; it is part of academic life and the legal environment. In those cases, people present their individual feedback.
In this case, we had a number of different forums in which to do that. We organized a roundtable, which was a place where people could address the group and make their own comments.
Other than that, nothing prevented the people who were consulted and who had received the material from making comments directly.
Ultimately, it was up to the Department of Justice to arbitrate between the different positions expressed by academics and professionals.
Senator Joyal: In terms of the results of that arbitration, do you have any reservations about some of the solutions presented by the Justice Department?
Mr. Rousseau: No, not particularly. As I stated earlier, I think this work was done with a certain diplomacy and a desire not to upset the existing legal order.
One of the areas where there could potentially be greater consequences is the sequestrator. There are a lot of changes here because we were really moving from a system built based on the common law to something developed for Quebec. And I believe we have been able to do this with a lot of diplomacy.
I wrote the study published in Thémis on this part, and seeing the results does not shock me at all, because I think that we were clever enough to appropriately make the bridge with the civil law system.
So this is a good example of a situation where I think we entirely fulfilled the objective, without necessarily using the mutatis mutandis solution I had suggested in my paper.
Furthermore, the legislative drafting technique and expertise within the bijuralism team is such that they arrived at solutions which are sometimes more harmonious than what we might be able to come up with as academics.
I have no particular disagreement with the legislative choices or reforms that have been put forward. I think they attained the objective. And in terms of other things we might wish for, as we said earlier, we would really like to see them move quickly into substantive law. That is the real stumbling block.
Senator Joyal: You are coming back to the core statute.
Mr. Rousseau: Exactly.
Senator Joyal: And you are aware of its deficiencies, either through your own practice or through your own analysis.
Mr. Rousseau: Exactly. That is the real stumbling block ahead of us in terms of harmonization. We are tempted to tackle it because we would like to resolve the problems at the same time, but we cannot do that. So, from that standpoint, we did not get everything we were looking for, but that is not a criticism in terms of the substance; it is the nature of the bill.
Senator Joyal: Based on your professional experience, what is the next priority area to be tackled under the harmonization initiative?
Mr. Rousseau: I would say there are two: the banking and financial sector is important, and another complex area where there is important federal legislation is transportation. There is a great deal of overlap between federal legislation and private law matters. I think there are some interesting questions to tackle in that area. Those are the two that come to mind. I know that thought is already being given to the banking sector. I am not sure whether there has been any discussion about transportation, but I also see it as a fairly important element.
Mr. Besner: One would definitely be tax law, but seen from two perspectives: from the perspective of harmonization and, at the same time, in terms of substantive changes. Right now, lawyers practising in Quebec read the federal legislation and try to dissect it. One example I could cite would be the whole area of property rights. Some of the concepts in there are extremely complex and give tax lawyers a lot of headaches. Ultimately, we do manage to figure things out, but it is a difficult exercise to have to come before a court of law in Quebec using common law concepts.
I know that the bijuralism team has already done some work in that area. It is a massive job, given the number of tax-related laws and how thick the Income Tax Act is. But, from a business standpoint, that is probably the next piece of legislation to be tackled, as far as we are concerned. But it has to be a two-pronged effort: harmonization and substantive changes. That would be ideal because in tax legislation, only addressing technical issues would probably not be enough.
Senator Joyal: As law professors, do you receive any compensation when you take part in this kind of consultation process? Do you receive any honoraria or a set amount of compensation, regardless of the number of hours you may spend preparing a paper or a report?
Mr. Rousseau: Compensation was paid for studies published in Thémis. These were studies commissioned with a view to looking more closely at specific issues associated with the act. Other than that, the answer is no; it was part of my own academic work and my interest; also, part of my role, as holder of the chair in business law, is to facilitate consultations and develop links with the professional community. It is a role that is just as important for a business law chair holder as for academics, in terms of ensuring that we do not end up in the infamous ivory tower and stay there indefinitely. That was also part of the reason why I was interested; it was an opportunity to participate directly in a project that I found very stimulating intellectually.
Senator Joyal: And for the Canadian Bar Association?
Mr. Besner: It is pure volunteer work. I would like to raise another issue. I have a small corporate law office. I am passionate about the law, and that is one of the reasons why I am here.
But for a lot of practising lawyers, available hours in our offices are minimal. In a large law office, it is easier to make use of resources assigned for consideration of a bill or to actually do a study of it; however, in a smaller office, it practically becomes a mission. Compensating people for providing their perspective might be a good thing. No one is going to win or lose an election as a result of this bill, but at the same time it affects a lot of people in the business and other communities. So, it is important to make these amendments.
Senator Joyal: These are provisions that are in the public interest, whatever one's political affiliation may be, because ultimately, they are helpful in terms of order and good government.
The Chair: Professor Rousseau, within your network of university colleagues working on these issues, is there anyone from the University of Ottawa? You named just about every university in Quebec, but not that one.
Mr. Rousseau: Forgive me for that oversight.
The Chair: The question was about Quebec universities, but I wanted to take it a step further.
Mr. Rousseau: Yes, and as part of the consultation process, the material was actually sent to all Canadian universities. Obviously, a project such as this is more directly related to the civil law, including the civil law section at the University of Ottawa's Law Faculty. They were in fact involved, insofar as they were interested in participating in the consultations on this bill.
The Chair: I would just like to comment briefly on your perfectly legitimate complaint about the problems that are caused witnesses whom we invite to appear with often very short advance notice. As you yourself suggested, we do not always control our own schedule. We never know exactly when a bill will be referred to committee, nor what other bills or studies must be completed before such and such a date.
For the senators and members of the public following our work, I would like to point out that when we have a good idea that a particular bill will end up in front of our committee, we try to preselect witnesses whom we feel should logically be involved, but we cannot send formal invitations out until the bill has actually been referred to the committee.
As you can see, it is a tricky situation, and we understand that it is difficult for everyone. That is why we doubly, and even triply, appreciate witnesses of your stature when you are available to help us with our work. I also wanted you to know that we do try to do what we can. Senator Carignan, you have barely five minutes.
Senator Carignan: I have a two-part practical question. In terms of provincial law and instruments or contracts that have already been signed or completed by parties, do you see any potential problem with instruments that were already signed or may have referred to previous provisions, compared to the new ones? Should we consider transitional provisions or include an amendment period, so as not to interfere with contracts, because people may have signed a contract based on what was in the former act, as opposed to the new one?
Secondly, will we need to have some discipline with the provinces when the time comes to change the terms and "copy and paste'' to adjust the act? Maybe we should be including a general interpretation clause to say, for example, that a term is being used and will be amended in future by the province, if that were to be the case? Should we include that kind of transitional provision and do you see any potential issues there?
The Chair: I am going to ask you to keep your answers relatively short because Senator Joyal has one final question he would like to ask.
Mr. Besner: In terms of the transition, I see no problem per se, even as far as contracts are concerned. But we may want to take a close look at this, because several different terms are used. Previously we used the term "agent,'' whereas now "mandatary'' is being added. So, we were able to understand one another in terms of the actual legislation, but I believe the bijuralism team could answer you with respect to each of the provisions.
There may be some transitional measures in the section dealing with sequestrators, but you would really have to go through it point by point; at first glance, I cannot really see anything of that nature. In terms of the amendments, I can give you another example. As regards the Not-for-Profit Corporations Act, which has been passed, I imagine the amendments followed because, the bill has been passed, but it is not yet in force. I imagine that Bill S-12 will follow the same process, because the legislation is practically identical. Rather than the term "member'' which is in the Not-for-Profit Corporations Act, we have the term "shareholder.'' Since the Canada Business Corporations Act was used as a canvas, it talks about an agreement between members, as opposed to a unanimous agreement. So, it might be a good idea to check it, but that is the kind of transition involved.
And as regards each of the provinces, there are obviously a lot of provinces that use the federal legislation as their basic canvas. The focus should be on cooperative agreements between the provinces in order to ensure that the right amendments are made. The Yukon is currently making changes, and Alberta is holding consultations at this time. It is up to the legal practitioners and experts to exchange information on this.
Senator Joyal: I would like to come back to your last recommendation, which is to make the substance of Bill S-12 as easily digestible and accessible to as many people as possible. Since we are in the third phase of this harmonization initiative, would it be appropriate, in any discussions you have with the Department of Justice, to agree on how the results will be made available subsequently, rather than simply sending the actual bill to a certain number of law professors or legal practitioners in the area of law affected by the bill?
It seems to me there should be an agreement on the protocol that will be followed for every new step in the harmonization initiative. Did you not raise this with the justice department officials as part of the consultation initiative, once you had arrived at the conclusion — or, to use a common law term, "wrap-up'' of your discussions with Justice Canada?
Mr. Rousseau: Not as I recall, but I think it is an idea worth exploring. The challenge is to ensure that the explanatory document accurately reflects the amendments. And because some of the amendments can be highly technical, is it really possible to accurately reflect them? That is the only question, as I see it.
It is a very good suggestion which, conceptually speaking, might well lay the groundwork for the bill that we are currently perfecting. At the same time, we could not really do without less accessible legal language, because we would not really be reflecting the actual reforms that have been introduced. In my opinion, it would be possible.
The Chair: Gentlemen, that is fantastic. You have given us rich and valuable testimony, and we thank you.
[English]
Honourable senators, we shall meet again in this room at 10:30 a.m. tomorrow morning.
(The committee adjourned.)