Mr. BENNETT:

That would not extend, I take it, to commercial corporations that provide benefits for their employees who make contributions to it, supplemented by a contribution from the company. Sometimes they are in the habit of referring to the employees as being insured in the company. Of course a joint stock company cannot lawfully carry on insurance, and if a change were made against them under the provisions of this section with a view of imposing a penalty, they would at once plead that the Joint Stock Companies Act provided that they should not have those powers conferred upon them, and this section would be wholly illusory as far

as the imposition of any penalty is concerned. You can put in the provision if you wish. It cannot have any effect.

Mr. DUNNING:

I think my right hon. friend will remember some cases during the last two or three years where in the absence of penalty provisions they just simply go on and do it anyway.

Mr. BENNETT:

But they cannot write

insurance.

Mr. DUNNING:

They do it.

Mr. BENNETT:

No, but it is ultra vires.

Mr. DUNNING:

The question is, what to do to them about it.

Mr. BENNETT:

The answer is, cancel their charters under the Joint Stock Companies Act.

Mr. DUNNING:

This action we are proposing to take to-day will make penalties available for that offence.

Mr. BENNETT:

Under the law as it stands, the directors would be liable if they are doing business that is ultra vires.

Mr. DUNNING:

The former Secretary

of State is not in the house. I have here a letter from him to the former Minister of Finance in which he makes that very point, that no penalty accrues in such a case.

Mr. BENNETT:

I know there is no penalty.

Mr. DUNNING:

And he suggests in the letter that the proper method of dealing with it would be to create penalties under the insurance act which would apply in such cases. In fact, the whole situation arises out of one particular case-

Mr. BENNETT:

Yes.

Mr. DUNNING:

-in western Canada, of which we found duplicates elsewhere, but not on so large a scale. The matter has been under consideration by the department of the Secretary of State from the standpoint of company incorporation and liability of directors, and by the Department of Insurance. The Department of Justice has also gone into the matter. I could read the letter, but I think I have fairly summarized it.

Mr. BENNETT:

I think I know in a

general way what it is. Perhaps I have not made my point clear. Obviously a company incorporated under the provisions of the Joint Stock Companies Act of Canada could not transact the business of life insur-

Canadian and British Insurance

ance; that is a prohibited business under the statute. Therefore, if a charge were brought against such a company alleging that it had been transacting life insurance business, the plea would be that it had no such power under its charter. That would be clear. That is the point, T think, that has not been made plain. Here is a recognition of a legal right which they do not possess. That is my point. Look at the section;

Any company, or any other corporation incorporated under the laws of the Dominion of Canada or of the late province of Canada, or any fraternal society so incorporated, which, or any person who, acting on behalf of a company or such a corporation or society, transacts any class of insurance business in respect of which the company or such corporation or society is not registered under this act ...

That is a recognition of its right to do the business, which obviously it has not. It is under the statute a prohibited class of business, yet, being prohibited, we now recognize it for the purpose of punishing it. With all deference I say to the minister that that is a perfectly clear position. Now that the minister has brought it to my attention I do recall something of the matter to which he refers. But I never recognized for a moment the right of that company to carry on an insurance business.

Mr. DUNNING:

We do not admit that we are doing so.

Mr. BENNETT; Quite so, but this says so. You say that any company which does this particular business is going to be punished. You cannot approbate and reprobate at the same time. My contention is that that is a prohibited business for a joint stock company. Being prohibited, obviously we cannot say: If you do the prohibited thing we are going to fine you under the insurance act. If the company goes beyond its charter it runs the risk of losing its charter, because what it does is ultra vires; the directors who transact the business are personally liable, and those who purport to receive the alleged benefits under it in fact receive none, because the business is not within the scope of the corporation. I do not think the section is happily drawn. It should be changed to read that any company "purporting" to transact the business, and so on, and refer it back to the provisions of the statute which makes it prohibited business. There is a general clause in the insurance act providing penalties for doing that which is prohibited by the act.

Mr. DUNNING:

Yes.

Mr. BENNETT:

Well, this is prohibited by the act. The insurance act prohibits this

class of company from doing that business. All joint stock companies are so prohibited. I think we should say "purporting to transact insurance business," rather than recognize that they are doing it. That, I think, is the usual custom in drafting legislation of this kind. In other words they are holding themselves out as entitled to do something which they have no legal right to do.

Mr. DUNNING:

Quite so.

Mr. BENNETT:

We are agreed as to that. But under the law as it stands there is a prohibition against their doing this thing under their charter. Therefore, it strikes me, all we have to do is to insert "purporting" to carry on business which they are not authorized to do; and we are going to punish them in this way rather than the other. That is all.