Mr. SPEAKER:

Shall the motion carry?

Mr. CAHAN:

On division.

Motion agreed to on division and bill read the third time and passed.

Mr. DUNNING:

This provides for proclamation.

Mr. DUNNING:

This represents a minor amendment consequential upon the former one. The present reading of (j) in the bill means a proposal made 'by a farmer. In view of the change made in the previous sections enabling executors of farmers to make application, the word " farmer " is dropped.

Mr. DUNNING:

In connection with section 7, it is proposed to drop subsection 3 of section 2 of the present act and substitute what is contained in section 10A of the bill now before the committee. The reason for the change is the wide difference in the opinions of courts and lawyers with reference to the procedure to be adopted by creditors under subsection 3, as it now stands, of section 2 of the act in case of default of a farmer which has been annoying and expensive to all concerned. For that reason it is desired to repeal that subsection and to provide a clear-cut method of dealing with the dishonest farmer, as was intended when the original act was passed, by substituting the new sections 10 and 10A. The real effect of sections 10A and 10A (2) is that whenever a farmer does not carry out the terms of the composition which has been made for him by the board of review, and the reasons for his

not carrying them out are not to be found in circumstances beyond his control, then the remedy provided is that the farmer shall revert to the position occupied by him in relation to his creditor before any order was made by the board.

Mr. SENN:

Who determines whether the farmer is responsible in the circumstances?

Mr. DUNNING:

The court.

Mr. TUCKER:

Is that supposed to be the only remedy? As I understand the decision of the courts at the present time, if someone were supposed to pay a 8100 debt at the rate of S20 a year for five years the creditor could sue, in the ordinary course, for that $20 when it became due. Is it intended now that this provision should be exclusive of other remedies? If a person had a $50 or 8100 debt due him, it should not be necessary for him, before he could sue for that debt, to have the scheme formulated by the board of review annulled. As I understand it, at present one can sue in the ordinary way for a debt due under a proposal that has been confirmed by the board of review, and that is very satisfactory in the case of small debts; it should not be necessary for creditors to have the composition annulled. Is that the idea of the amendment?

Mr. DUNNING:

This amendment provides the remedy set out in it in addition to any other remedies that may exist, particularly those that exist under provincial legislation. This is an additional remedy in the case of a farmer who dishonestly makes no attempt to carry out the terms of the composition that has been made in his favour. It means that under this legislation, in its relationship bo the bankruptcy law, the whole transaction so far as the board of review is concerned is wiped out and the farmer reverts to the position he occupied before any order was made.

Mr. GLEN:

Since the discussion on March 18, another case has been brought to my attention. A farmer who had already received an order from the board of review before the first payment was due called for an auction sale of his stock and equipment, and the creditors who went to the official receiver to find out what protection they had discovered that they had no remedy under the act. The clause as now drafted is sufficient for the purpose, but it will have to go further. When the matter was under discussion on March 18 I put on Hansard rules 48 and 49, which will be found at page 1494. There are four

Farmers' Creditors Act

reasons for the issuing of an order setting aside a proposal: They apply where the

debtor has:

(a) made a fraudulent or preferential conveyance, gift, delivery or transfer of any of his property; _

(b) with intent to defeat or delay his creditors, departed or remained out of Canada;

(c) assigned, removed, secreted or disposed of any of his property with intent to defraud, defeat, or delay his creditors;

(d) conducted himself to the satisfaction of the official receiver in such manner as indicates bad faith towards his creditors.

The courts have taken the position that the rules apply only prior to the granting of the final order by the board of review. Unless the rules are altered so as to apply to a farmer who has defaulted of his own accord and not in consequence of circumstances, such as climatic conditions, beyond his control; unless it is possible for action to be taken under the rules after the board of review's order is given, then the rules mean nothing. Section 10 (a) as now drafted is satisfactory in that it provides for the cancellation of the order should any of these four reasons be established-and they are serious enough to warrant annulment of the board of review's order. But the rules will have to be altered so as to remove any doubt there may be in the minds of the court that the rules apply after the board of review have made their review as well as before.

Mr. DUNNING:

The matter of amending the rules to make them conform to the intent of the section is now before the department and is under consideration. Of course, the provincial law of contract continues to operate in connection with settlements under this act, and we must be careful not to put in the act anything that might invalidate proceedings because of interference with provincial rights in that regard.

Mr. PERLEY:

What will be the position of the farmer if he finds himself unable to carry out the arrangement made prior to the coming into effect of this act? He has been unable to make the payments under the former arrangement; he is in default through no fault of his own. Will he have to have a new proposal formulated, or can he get an extension of time?

Mr. DUNNING:

He cannot be put into bankruptcy. It is clear that if the farmer is unable to carry out the arrangement through circumstances over which he has no control, this section does not apply. The court would not put that farmer into bankruptcy and thus have him revert to the condition he was in prior to

the issue of the original order of the board of review. As I stated on a former occasion, there is not and cannot be provision for rehearing. If we were to open that subject again I know what would happen. It would be just what has happened on previous occasions; those who wish to have a better deal for the creditors will insist upon some right of appeal from the decisions of the board, from the creditors' point of view. I am afraid that if we provided for appeals or rehearings the value of this legislation would be lost in a tangle of legal proceedings. So it is not proposed to change that part of the statute; there is no intention to create a right of appeal either way. We believe that in that regard the legislation 'has worked as well as can be expected, 'having regard to the difficulties always attendant upon legislation of this kind.

Mr. PERLEY:

Do we understand then that it would be within the competence of the board to grant an extension of time without having an appeal made by either creditor or debtor?

Mr. DUNNING:

It is not within the competence of the board, but it is within the competence of the court.