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Proceedings of the Standing Joint Committee for the 
Scrutiny of Regulations

Issue 19 - Evidence - May 4, 2017

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OTTAWA, Thursday, May 4, 2017

The Standing Joint Committee for the Scrutiny of Regulations met this day at 8:30 a.m. for the review of statutory instruments (SOR/2008-222 — Wage Earner Protection Program Regulations); and, in camera, for the consideration of a draft agenda (future business).

Senator Joseph A. Day and Mr. Harold Albrecht (Joint Chairs) in the chair.

[English]

The Joint Chair (Mr. Albrecht): Welcome to this meeting of the Standing Joint Committee for the Scrutiny of Regulations. We have with us this morning witnesses from Employment and Social Development Canada. We are dealing with SOR/2008-222, Wage Earner Protection Program Regulations. This matter has been ongoing for a number of years, so we have asked the minister to appear. The witnesses are appearing on her behalf. We welcome Mr. Gary Robertson who will begin with an opening statement, and then we'll follow with questions from our members.

Welcome, Mr. Robertson.

[Translation]

SOR/2008-222 — WAGE EARNER PROTECTION PROGRAM REGULATIONS

(For text of documents, see Appendix A, p. 19A:1.)

Gary Robertson, Assistant Deputy Minister, Labour Program, Employment and Social Development Canada: Good morning and thank you for the invitation to address you today with respect to the Wage Earner Protection Program Regulations. I'm joined today by Brenda Baxter, Director General, Workplace Directorate, Labour Program, as well as Mark McCombs and Bernard Auger from the Department of Justice.

[English]

At the outset, I would like to assure the committee that we recognize the importance of your role in reviewing and scrutinizing regulations. We also appreciate your patience as we have worked to address some of the issues that have been raised by the committee.

The Joint Chair (Mr. Albrecht): Maybe I could just interrupt for a few seconds. I did mean to draw to the attention of committee members that a number of action items have already been promised, and we'll deal with those as well. My apologies on that.

Mr. Robertson: That's quite all right.

[Translation]

The Labour Program officials have had the pleasure of meeting with the new general counsel in recent months. These meetings have been useful exchanges of information and have given us a stronger understanding of the process undertaken by the committee.

[English]

I will begin my remarks with a brief overview of the Wage Earner Protection Program, also known as WEPP, and the important role that it plays in supporting workers who are owed wages when their employer files for bankruptcy or enters receivership. Following that, I will speak more specifically to the role of trustees and receivers under the WEPP program and why in some cases it's beneficial to the functioning of the program that they be paid for their expenses.

Lastly, I will speak to section 19, which I know is of particular interest to the committee, to explain its purpose and our experience with it, and to address the specific concerns raised by the committee.

The Wage Earner Protection Program Act and the regulations came into effect on July 7, 2008. The act reimburses workers for wages, vacation pay, severance and termination pay that are owed to them when their employer files for bankruptcy or enters receivership. Payments are capped at a maximum of four weeks of Employment Insurance insurable earnings, which is currently just below $4,000 — $3,946. Since the inception of the program, it has paid out a total of $245 million to over 102,000 recipients, almost a quarter of a billion dollars.

[Translation]

The program is working well. A five-year statutory review of the program was tabled in Parliament in spring of 2015. The review found that the administration and operation of the WEPP are successful, and that the program has significantly improved the ability of employees to successfully recover amounts owed to them by their insolvent employers in a timely fashion.

[English]

Prior to the existence of the program, unpaid wage claims of workers were only recovered at a rate of 13 cents for every dollar, and only 5 per cent of the workforce was able to obtain those payments. Since the introduction of the program, the average payment has increased to 64 cents for every dollar owed, a significant difference.

[Translation]

Now I would like to draw your attention to the vital role that trustees and receivers play in supporting the administration of the program. They are the ones responsible for informing workers about the program and how they may apply for it, and for submitting the information that is used by Service Canada to determine applicants' eligibility for the program.

[English]

Furthermore, in order to function effectively, the program is reliant on trustees and receivers to take the administration of insolvent employers' estates, fulfilling their statutory role under federal insolvency legislation. The program — and this point is important — cannot disburse payments to workers unless there has been a bankruptcy or receivership. Trustees and receivers, understandably, will not take on cases without the prospect of being paid for their services. So the program absolutely requires a mechanism for encouraging trustees and receivers to take up the administration of low- or no-asset estates, which are also known as orphan estates.

Section 22 of the Wage Earner Protection Program Act establishes that fees and expenses of trustees and receivers are to be paid out of the company's estate, and that is exactly what happens in the vast majority of cases. However, subsection 22(2) also provides the minister with the authority to pay fees and expenses that are prescribed in regulations, with section 18 of the regulations covering fees for WEPP-related duties and section 19 covers fees for the broader administration of the estate.

The committee has taken the view that section 19 is ultra vires, and indeed that is the reason for our appearance before you today. Please allow me to explain how section 19 is integral to the purpose of the act and why the Labour Program is of the view that it is within the scope of the enabling authority provided by the act itself.

First of all, as I mentioned earlier, the WEPP is a program that provides support to workers who are owed wages when their employer files for bankruptcy or enters receivership. Workers cannot access the program if there is no bankruptcy or receivership, which is often the case when there are little or no assets remaining in the estate. As noted earlier, trustees' and receivers' fees and expenses are normally paid out of the insolvent estate, but the WEPP Regulations set out a regime to pay fees and expenses when there are insufficient funds.

More specifically, section 19 provides for the authority to pay trustees and receivers for the broader administration of the estate, but places strict eligibility conditions on when payments can be made and limits the amounts that may be disbursed. The broader definition attempts to encourage trustees and receivers to take on low- or no-asset bankruptcies in order to ensure that vulnerable and precarious workers have access to the program.

[Translation]

To date, there has only been one payment made under section 19, which resulted in a trustee receiving an amount of $2,323. The Labour Program is currently consulting with stakeholders on both sections 18 and 19, to improve the trustee payments regime with a view to providing support for trustees and receivers who take on low or no asset bankruptcies.

[English]

This program is working for Canadians. Workers should not be excluded from the program because their employer had so few assets that a trustee or receiver was unwilling to administer the estate. Furthermore, there are cogent arguments to make in supporting our position that subsection 22(2) of the WEPP Act provides sufficient authority to make regulations prescribing the fees and expenses, such as the ones set out in section 19 of the regulations.

First, subsection 22(1) of the WEPP Act includes an express qualification that the trustee's or receiver's fees and expenses must be in relation to the performance of their duties under the act. The same qualification does not appear in the wording of subsection 22(2). Additionally, there is no wording in subsection 22(2) that clearly links its application to subsection (1). Such a link could easily have been accomplished in the wording of the provision had that been the intent.

In our view, therefore, the broad wording of subsection 22(2), the difference in wording between subsections 22(1) and 22(2), as well as the lack of an express link between the two subsections indicate that there is sufficient authority in the WEPP Act to make regulations prescribing the fees or expenses, not only in relation to the performance of the trustee's or receiver's duties under the act, but also those fees and expenses relating to the broader administration of the bankrupt estate where it is necessary to meet the objectives of the act.

[Translation]

It is also our view that section 19 of the WEPP Regulations is aligned with the purposes of the WEPP Act. As previously mentioned, trustees and receivers play a key role in carrying out the purposes of the act, which is to make payments to employees for wages owing to them if their employer has filed for bankruptcy or entered receivership.

[English]

Payments to employees under WEPP are based on information collected and communicated by trustees and receivers. Payments cannot be made without this information. More fundamentally, if no trustee or receiver agrees to act for such an employer, there would be no means to make payments to the employees who are owed wages. If a trustee or receiver refuses to act due to insufficient funds in the business to pay for their fees and expenses, there would be no other mechanism to make these same payments.

A narrow interpretation of subsection 22(2) would significantly undermine the realization of the objective of the act, which is to ensure that employees are paid. As such, it is our position that there are strong arguments to support the validity of section 19 and that it should therefore not be disallowed.

As a final note, I would like to add that if there is an opportunity to amend the act in the future, we will seek to clarify section 22 in order to address the committee's concerns.

[Translation]

This concludes my remarks, and I would be pleased to respond to questions from committee members.

[English]

Thank you very much.

The Joint Chair (Mr. Albrecht): We'll go to questions. I would just like to point out to our officials who are here this morning, on behalf of the committee, and in response to the department, that it's very disappointing to see the number of years that have transpired and the number of letters back and forth before we finally arrived at this situation today. But I'm heartened by your comments today and I look to the committee now for any comments or questions they would like to raise of our witnesses.

[Translation]

Mr. Dusseault: First of all, thank you for being here. It is much appreciated.

I would like to come back to the issue of delays and whether there is a reason why it took so long, from 2012 to your detailed 2015 response. Why did it take two years and a half to get a substantive response on the issues raised in December 2012 by the committee and which were the basis for the first letter to your department?

Mr. Robertson: It is difficult for me to answer in detail because I started my duties under the program in September 2015. There is no doubt that there was a delay, but it is normal for an organization to take the time it needs to thoroughly review the comments of a committee like this.

[English]

I can't respond in detail as to why the delay has existed since 2012, but what I can tell you is good intentions were possessed by the program. People were examining in detail the comments and were trying to respond in equal detail.

Certainly, since I joined the program, I think there has been a fair amount of communication, both formally through written correspondence but also informally through meetings with the counsel, and we're hoping to maintain that better posture and more positive interaction.

[Translation]

Mr. Dusseault: Have you changed the procedures for receiving a letter, dealing with it and then responding to it? Have you addressed this situation to try to improve the way of doing things since you took office?

Mr. Robertson: We have more or less the same process as before. Of course, we intend to interact in a professional manner. Typically, we need to review the notes, prepare a draft, consult with our lawyer who will also review everything. We have a long process of steps to complete before sending the response, which takes a long time.

[English]

The other thing I would add is, as you well know, the regulatory process is quite long in and of itself. If we're at a point, for example, in a consultation process where we're trying to understand a stakeholder view which may inform our response, it is conceivable that we would delay the response by a month or two so that we have a better, more well- informed response to the committee.

[Translation]

Mr. Dusseault: With respect to subsection 22(2) of the act, can you clarify your interpretation? Subsection 22(2) of the act allows you to pay fees to trustees or receivers to settle the bankruptcy of the businesses in question; your interpretation ensures that you pay amounts that are not related to the administration of the wage earner program. Am I making the right interpretation?

Mr. Robertson: The legislation is not as clear as it could ideally be, but we think we have the authority to make the payment and to reimburse the professionals who do the work for us.

[English]

On the point of 22(2) specifically, we are of the view that it's broad enough to allow us to make those payments.

Something that may be of interest to committee, and I pointed it out in my opening remarks, is that it's not something that's used very frequently. We have only actually used it once in 10 years.

It's not something that we spend millions of dollars on. We have spent less than $2,400 once, but we still feel that it's an important part of the act, because if the economy was ever to take a downturn and we were to realize more bankruptcies, we would want to be in a position to support workers who are owed wages from these companies during a very difficult transition period.

[Translation]

Mr. Dusseault: I am not so interested in the amounts. Whether it's $1 or $2 million, if you authorize expenditures that are not allowed by law, by Parliament, that's a problem. That is why you are here today; that is the interpretation of the committee. Subsection 22(2) of the act must also be understood in context, under the Wage Earner Protection Program Act. That is why we have a lot of questions about that, because in the context of section 22, which must not be considered in isolation, in our opinion, subsection 22(2) is in the context of the Wage Earner Protection Program Act.

Now, you say you can interpret it as being able to pay amounts that are not related to the Wage Earner Protection Program, whereas subsection 22(2) is part of the Wage Earner Protection Program Act. Do you understand why we are asking about payments that are not related to the program, whereas the issue is the Wage Earner Protection Program Act?

Mr. Robertson: That is interesting, because I think there is an indirect link. Of course, with respect to subsection 22(1), it is simply the administration of the program. In my view, subsection 22(2) supports the program indirectly.

[English]

In other words, in my view, and in the program's view, 22(1) is to pay for the fees that are directly related to the program, and 22(2) is to pay fees that are indirectly supporting the program. In other words, in the event we didn't pay for those indirect activities, no work would be done, and the workers who worked for that company would not receive payments.

So it still supports, in my view and the program's view, the activities of the program. It just does so indirectly.

[Translation]

Mr. Dusseault: Do you believe that, if that had been the intention of the lawmaker, it would have been stated expressly in this way in the act?

Mr. Robertson: In my opinion, yes, because otherwise there would have been only one subsection and one section. There are two, and the two subsections exist.

[English]

They exist in the same space. It's not like it was seven clauses down and someone didn't cross-reference. They put the two very similar clauses right beside each other, and I would argue it's because there was a recognition that the first one was to pay for the direct and the second was to pay for the indirect.

The Joint Chair (Mr. Albrecht): I don't think there's any question. I just want to clarify that we all want the Wage Earner Protection Program to function, and we get your point that it could not function or it might not.

Yet, in your second-last paragraph you point out that you're willing to amend it. I wonder if we shouldn't just cut to the quick and ask you to do that. It seems like we're wasting a lot of time just debating he said/she said.

I'm looking to committee members: What action do we want to take? Do we want to move expeditiously on this? We want to make sure the program succeeds in doing the function that it's required to do, and yet at the same time we want to be sure we're following the letter and the spirit of the law.

Mr. Di Iorio: Part of the problem here comes obviously from the time that has elapsed. When we get the explanation after a very long period of time, had it been received long ago, probably more thought could have been given to it, more reflection. Therefore, you might not even have to consider amending it.

I do want to hear more from you on your argument. I read the documents in French. For sake of brevity, I could even look at the English version. I'm looking at section 22 of the act, because that's what it's all about.

Mr. Robertson: Yes.

Mr. Di Iorio: It states:

The trustee's or receiver's fees and expenses, in relation to the performance of their duties under this Act, are to be paid out of the estate of the bankrupt employer or the property of the insolvent employer, as the case may be.

So there's no requirement for any regulation. It's the law. You apply the statute.

Then we have subsection 22(2) and a reference to regulation: "The minister shall, in the circumstances prescribed by regulation . . . .'' So the first thing I would like to know is this: Are there any limitations on this regulation that could be adopted?

Mr. Robertson: The regulations do prescribe, and actually we've been —

Mr. Di Iorio: I'm sorry to interrupt, but I misstated my question.

So we have the phrase "in the circumstances prescribed by regulation.'' Sometimes we say that the government can make regulation as it pertains to the colour of the paint, which obviously excludes the colour of the flooring or the ceiling. So here, is there any such constraint? It says, "in the circumstances prescribed by regulation.'' Are there any limitations?

Mr. Robertson: I would be of the view no.

Mr. Di Iorio: None of you have seen any constraints or limitations on the regulations like the example that I gave you?

Mr. Robertson: What I would say is that like any other regulation, you have to go through a very arduous process to get to the final result. The gazetting process makes public what's being considered through prepublication — Canada Gazette Part I — before you actually go through, finalize and put into play the final outcome.

So I think there's a high degree of visibility and transparency, both through the process and through what results from the process. But, in this case, no, I think that as long as it's related to supporting the program, then it's legitimate.

Mr. Di Iorio: So could it be that in 22(1) the legislation sets out the rule and that in 22(2) it sets out the exceptions to the rule but that those exceptions are to be contained in a regulation?

Mr. Robertson: This is where I would agree that it's not as clear as it could have been. I think this is where we would agree that, at the next opportunity, we would try to clarify it.

Mr. Di Iorio: That's not my question. I'm really talking about the legislative framework.

So 22(1) sets out the rule. It's paid out of the estate of the employer. The rule is stated in 22(1). Like any rule, it can have an exception, so what is the exception? Well, you want to know the exception? We leave it to the discretion of the government to adopt regulation, giving the minister authority to apply whatever exception the government decides to outline in the regulation.

Bernard Auger, General Counsel, Legislative Services Branch, Department of Justice: I think that's one interpretation, but on the other hand, as was stated in the opening remarks, there's another reading of that provision — the fact that 22(2) does not contain any limitation as far as the wording is concerned, contrary to subsection (1). Basically, 22(2) provides that the fees and expenses are the ones prescribed by regulation, so that work was delegated to the Governor-in-Council. So there's no clear link between the two provisions.

The disagreement seems to be based on the structure of the provision. Although it's true that the structure of a provision can play a role in the interpretation, sometimes it's not necessarily conclusive.

Mr. Di Iorio: But I'm suggesting a third method by which you would not have to debate the fact that it's disjointed. They could remain joined by saying that in the first it's the rule, and in the second it's the exception to the rule — example: It will be paid by the government in certain circumstances. That would be an exception to the rule. Those exceptions, where are they to be found? They will be found in a regulation, where the legislation gives authority to the government to adopt regulation. So that way you don't need to interpret them in a disjointed way. You can join them. Paragraph one is the rule; paragraph two is the exceptions. And where do we find those exceptions? Well, we go to the regulations, and that's why I asked you the question.

There are no constraints on the regulation like the example that I gave you. It simply says "regulation,'' so as long as they pertain to the legislation, you're okay.

Mr. Robertson: Under that line of reasoning, that would make sense, yes.

Mr. Di Iorio: So there could be a third possibility.

Mr. Badawey: You made a comment earlier that if the regulation was actually amended, then other regulations would have to be amended as well. What did you mean by that?

Mr. Robertson: I don't recall that. What I said was that we were open to amending the legislation at the next natural opportunity, to make it clear that it was permitted, to alleviate any of the problems with the multiple interpretations. I hadn't meant to say that we were going to modify the regulation.

Mr. Badawey: My second question might be digressing a bit, but when I read this, I read about wages being reimbursed if, in fact, a company goes insolvent, whether it be bankruptcy or receivership. With respect to pensions, they are paid or expected to be paid based on wages earned, wages contributed, pensions accrued. Would pensions fall under this as well?

Mr. Robertson: No, they don't.

Mr. Badawey: And why wouldn't they?

Mr. Robertson: I don't have a deep understanding, but the legislation is owned by Innovation, Science and Economic Development Canada. They create the structure by which those companies are dealt with and what different folks are owed and how those are divvied up.

I do know that this program, when it was enacted, created a super-priority for salaries. In other words, it made sure that the folks that were most vulnerable and most directly impacted by the poor performance of the organization weren't unduly penalized. So those monies are essentially paid out first, and then others get to go after whatever's left.

It doesn't cover pensions, but it's a significant issue, I'm sure.

Mr. Badawey: Thank you.

Mr. Oliver: I have been reading it a bit differently. As I understood it, 22(1) deals with payment to trustees and receivers for their performance of duties, but it's limited to funds that are available out of the bankrupt employee or the insolvent employer.

Mr. Robertson: That is correct.

Mr. Oliver: Subsection (2), therefore, was added — and we received the notes on the evolution of the statute — to make sure that there was capacity to pay if there were insufficient funds in the bankrupt employer's or the previous employer's assets. So that allows the government to pay them.

So 18 establishes that. That is the regulation that allows you to pay in the circumstances where there are insufficient funds, but 19 seems to be different. It's not about insufficient funds. It's about payments that are for duties that are outside of the act.

In the one time that you've paid it, the $2,400, what would the example be? It wouldn't have been about insufficient funds because 18 allows you to reimburse it. It looks like you're paying for duties that were outside of what was intended in the act. Is that correct? I could be reading it wrong. I'm not a lawyer.

Mr. Robertson: My understanding is the single payment that was made was made under 19, and it was because once they had gone through the administrative process, there weren't sufficient funds left in the organization to reimburse them for their fees.

Mr. Oliver: So 18 doesn't give you the authority to pay where there are insufficient funds?

Mr. Robertson: No, it's much more limiting and it's only to direct WEPP activities. So 18 is limited to direct WEPP activities; in other words, assessing payroll, et cetera, to go through and find out which each individual employee is owed. It's not just the wages, by the way; accrued vacation pay was also the priority.

Mr. Oliver: Regardless of what it's for, if there are insufficient funds, 18 allows you to make payments.

Mr. Robertson: Yes.

Mr. Oliver: By the government where there are insufficient funds.

The Joint Chair (Mr. Albrecht): Ms. Baxter do you want to respond?

Brenda Baxter, Director General, Workplace Directorate, Labour Program, Employment and Social Development Canada: What 18 does is pay for the administration of WEPP, so the trustee or receiver would get paid a small fee of $600 plus $35 for each claim that they are working on. That's all that it pays.

Should there be insufficient funds in the estate, section 19 is able to cover some of the fees and expenses that a trustee or receiver would incur in order to administer the WEPP Act. That would be a mail-out, publishing the notice of bankruptcy in a newspaper, official taxation issues, et cetera.

These fees would not be able to be covered under section 18.

Mr. Oliver: Thank you.

Mr. Genuis: In terms of the issues of section 19, I think we would all agree that we are best off having the clarification happen, so I wonder if you could talk about what is meant by the next natural opportunity and what a likely time frame for that would be.

Mr. Robertson: I can't speak with authority because I can only make recommendations through the system, but our minister has a number of mandate items that she's pursuing, some of which could tangentially be linked to this particular opportunity. I think the opportunity would be to see which of those would best align, and if there is an opportunity for her to table legislation, we would include this as part of one of those pieces.

I can't be more specific than that because I don't control the legislative agenda, but the intent is to include it where possible.

Mr. Genuis: As a follow-up question, I want to make sure that the minister is aware of your testimony, aware of the issues here and receiving that advice directly.

Mr. Robertson: Yes, she received the invitation, and she asked us to appear on her behalf.

Mr. Genuis: Right. Ministers can't always appear, but certainly she would be engaged with knowing about the substance of the issues and the testimony.

Mr. Robertson: As far as I'm aware, yes.

The Joint Chair (Mr. Albrecht): To follow up on that, would you have any rough timeline? I know you can't say it could be done within six months or six weeks, but can you even say within two years?

Mr. Robertson: I honestly can't say because, again, it's contingent on a piece of legislation being tabled where there's a link. There will be only a few of those that are in play, and there will be questions and challenges throughout the process. I can only tell you that if there is an opportunity and it's possible to, then we would.

The Joint Chair (Mr. Albrecht): Does anyone else care to comment?

The Joint Chair (Senator Day): On that last point, I read in our briefing notes there is a five-year statutory review. Does that also include regulatory review?

Mr. Robertson: It does. It focused on the whole program and all the elements of it. The one that was done and tabled in both houses in 2015 suggested the program was quite well administered. It didn't identify any material issues that I'm aware of.

The Joint Chair (Senator Day): Would that present the opportunity that you're talking about here? The next five- year —

Mr. Robertson: It's not a legislative vehicle, but certainly the next review, because we are supposed to do it every five years, would give us an opportunity to say what the issues are with the program as it exists today. Yes, this could be one of the issues flagged through the second review process.

The Joint Chair (Senator Day): So that could be one of the opportunities.

Mark McCombs, Senior General Counsel, Head of Legal Services, Department of Justice: Let me add to that. There's no doubt when we do the review of the WEPP Act and the regs that we're going to find some issues, be it from stakeholders or internally to government or this committee, which we're going to need to look at. And part of those recommendations will come in that five-year review. So I would anticipate that five-year review would trigger the opportunity for us to go forward in doing some cleanup or advancement of the legislation because that's the purpose of the five-year review.

Mr. Robertson: I'll have to go back. I'm not sure that it's actually repeatable. Most programs I have been associated with have it every five years. This one may only be a one-time deal after the creation of the program because it was new. I'll go back and check on that.

The Joint Chair (Senator Day): Thank you.

The Joint Chair (Mr. Albrecht): As an editorial comment, the issue was raised in 2012, so it could have technically been raised in the review in 2015.

I want to look to counsel for any remarks she would like to make.

Evelyne Borkowski-Parent, General Counsel to the Committee: With regard to the five-year review, isn't it true that part of the review identified the fact that even with your interpretation of section 22, you still had issues attracting trustees and receivers to take on low- or no-asset estates?

Mr. Robertson: Yes. As I said, we're going through consultations right now because in all likelihood we will revise the payment regime to make it more attractive for folks to do this. Again, folks associated with these companies that are owed back wages are in very precarious situations, and if we can't support them through appropriate payments, then they remain in that precarious situation. So yes, it is an issue we're examining.

Ms. Borkowski-Parent: Isn't that the next natural opportunity to address the ambiguity in section 22?

Mr. Robertson: If it's a legal change we're making, but if it's a regulatory change, no. The fundamental question is whether or not the authority exists, and that's a legal authority.

I'm not trying to split hairs, but my understanding is that if we get a chance to modify the legislation, we can provide the clarity. If the debate is still whether the authority exists or not, then that's not something you could adjust and satisfy that other perspective.

Ms. Borkowski-Parent: Let's say you were to create another incentive for trustees and receivers to take on estates, a bonus, for example, would you see section 22 as giving you that authority?

Mr. Robertson: I'd have to look at that. I wasn't contemplating any kind of bonus regime. What we were trying to do was establish whether or not the payments were adequate and sufficient.

Mr. McCombs: Let me add that we don't think there's any authority to establish a bonus regime. If we were going to change this, then we will move in and fix the enabling authority; that is where we have to go. The enabling authority, the reg, is what the committee is focused on.

The Joint Chair (Mr. Albrecht): Is there a further word from counsel?

Cynthia Kirkby, Counsel to the Committee: When you talk about expanding the payment regime, would that be under the regulations?

Mr. Robertson: Increasing it under the regulations, yes. So if we pay a dollar today and they need $1.20, then yes, it would be modified in that schedule.

Ms. Kirkby: You're looking at adjusting the amounts in section 19, not additional types of fees and expenses?

Mr. Robertson: Right.

The Joint Chair (Mr. Albrecht): We're still dealing with the fundamental issue of interpretation of 22(2) and the potential request of the department to actually change the legislation. I would look to the committee for counsel and direction and maybe a motion.

[Translation]

Mr. Dusseault: I would like to go back to the issue of interpretation. You said earlier in your remarks that subsection 22(2) is completely independent of subsection 22(1), and therefore you interpret it independently. However, you said that subsection 22(2) appeared after subsection 22(1) for a reason, and that if it had appeared seven sections down, that might have made a difference. So it had to be interpreted with subsection 22(1).

I'm trying to understand whether your position is still to interpret subsection 22(2) as completely independent, or whether it should be interpreted in relation to subsection 22(1).

[English]

Mr. Auger: I was not sure about the actual location, but as I mentioned before, for whatever reason, section 22 is crafted as it is in two separate subsections. We read them as being distinct, providing two different rules or two different statements. Again, the fact that they are in the same provision seems to be creating this interpretation question.

I'll reiterate the structure of a provision. I don't know if that's what Mr. Robertson was alluding to, but if it were two distinct provisions, it seems that nobody would have an issue or less of an issue. It seems to be the fact that being part of the same section creates these possible interpretations. Again, as was stated before, the way they are drafted, they don't seem to have clear links between the two.

Even though the structure can play a role in interpretation of a provision, it's not necessarily conclusive, and the clear and plain language of subsection (2) seems to allow for the Governor-in-Council to prescribe the fees that are set out in section 19.

[Translation]

Mr. Dusseault: I hear you, but according to several experts and thanks to our advisers, we have expert opinions in legal drafting. Generally, they will say that, when provisions are related to the same section and there are subsections in the same section, they must be interpreted together.

Now, you are telling me the opposite, that they should not be interpreted together, but rather as two distinct sections.

Mr. Auger: There are two distinct provisions, subsections 1 and 2, which are included in the same section. What motivated the drafter to choose to put those two provisions in the same section? It may be the simple fact that we are dealing with the same matter, the expenses of trustees and receivers. That could be the explanation.

Mr. Dusseault: Okay. Thank you.

[English]

The Joint Chair (Mr. Albrecht): It appears to me, members, that we have a couple of options. I think our original letter suggested the possibility of disallowance. We understand as well there's only been one case in the last 10 years where this has been done. However, as has been pointed out, it is a legal matter. So disallowance is the one option.

The other option is to send a request by the committee that the act be amended as its earliest opportunity to clarify, without ambiguity, and possibly deal with the additional question that our witnesses have raised today in terms of extra funding to be able to attract the kind of people who will work on these cases that are necessary for the effective functioning of the WEPP program.

Those are two options that I see. Maybe I'm missing a few.

Mr. Di Iorio: Mr. Chair, with all due respect, and I understand that I have a limited understanding of this — I have read the material, which is well done — but I am under the view that the regulation is valid. The option that I discussed is a third option. With that third option, the regulation is valid because subsection (1) gives us the rule and subsection (2) gives us the exceptions to the rule. There is no limitation to the list of exceptions. The government decided to adopt the regulation, and in that list of exceptions, it said how it could be paid when there's no money coming from the estate. Therefore, it is a valid regulation.

The Joint Chair (Mr. Albrecht): Okay, that's one interpretation.

Mr. Di Iorio: I just wanted to point to you that there is another option.

The Joint Chair (Mr. Albrecht): If you're prepared to make a motion in that regard, we can deal with it.

Mr. Di Iorio: Do we do this amongst ourselves? Do we do it with the panel of witnesses? They can remain available for us if it could be useful.

The Joint Chair (Mr. Albrecht): We will probably deal with it after they are dismissed.

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Mr. Dusseault: I am prepared to wait.

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The Joint Chair (Mr. Albrecht): I would like to comment that if we are prepared to move ahead on this particular issue after the witnesses are dismissed, let's quickly move to the second paragraph on page 1 where it indicates that action is promised on other issues. The only issue I would raise in regard to those is that while action has been promised, no timeline is indicated. I'm not sure if the committee wishes to request of the department a time by which they will actually deal with these items.

Ms. Borkowski-Parent: There was one note dealing with section 22. The second note deals with the other three remaining points on this file: the disparity and the definition of "termination'' as it applies to sections 3 and 9; vague requirements of the submission of late applications under sections 9, 11 and 13; and the lack of coherence between subsection 21(4) of the act and 15(2)(b) of the regulation.

The department now agrees to amend these issues, which I might note includes one case of amendment to the act for the disparity between paragraph 15(2)(b) of the regulations and subsection 21(4) of the act, but there were no timelines provided for the amendments.

That's where the rest of the file stands.

The Joint Chair (Mr. Albrecht): Would you be prepared to give us an idea as to a timeline now or are you not able to do that?

Mr. Robertson: Again, I can't, and it's because many ministers in the system have a very heavy legislative workload. The opportunities will present themselves through aligning with pre-existing activities. I don't think there's much capacity in the system to introduce new, unique bills and make sure they move through.

We're aware of our minister's mandate items. There is legislation I know she's intending to introduce over the next cycle or two, and it would be our intention to make best efforts to align where possible.

I know that may appear to be an unsatisfactory comment, but it's a true one.

The Joint Chair (Mr. Albrecht): It's unsatisfactory in light of the history of this file.

Mr. Robertson: I understand.

The Joint Chair (Mr. Albrecht): If it were a unique situation, it may not be quite as unsatisfactory, but with a long history, I think you can understand the frustration of the committee.

Mr. Robertson: I understand.

The Joint Chair (Mr. Albrecht): Therefore, our request is that it be done expeditiously.

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Mr. Dusseault: We are referring to clarifications to the regulations.

Ms. Borkowski-Parent: And in the act.

Mr. Dusseault: Okay. Because, according to sections 3 and 9 of the regulations, it is not necessary to go through the legislative procedure to which you refer. It's just the regulatory process.

Mr. Robertson: In sections 3 and 9?

Mr. Dusseault: Yes, of the regulations.

Mr. Robertson: Yes, we intend to amend them.

Mr. Dusseault: In the short term, has the work begun? Is it coming along?

Mr. Robertson: Probably. I have a better idea about this action, because, every year, we have —

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— a forward regulatory plan. That item is not embedded in this year's plan, 2017-18, so I would expect that you would see those in 2018-19.

Mr. Badawey: May I suggest that we formalize a letter to the department with the outstanding issues attached, with an expectation in that letter that we receive an update within a few months as to where it's at. With that, as well, there can be some communication with the department to try and expedite this and bring the proper legislation forward within the next few months.

The key is to have those updates on where this is so it doesn't stand idle. Possibly the committee can receive an update from you in September on where this stands. It will be incumbent upon us as well to actually push the issue within the different departments.

The Joint Chair (Mr. Albrecht): We can proceed with that.

I would suggest that we allow our witnesses to be dismissed. Thank you very much for your time today and for your ongoing work.

We are not in camera, but we do want to finish up the agenda item. We have had three potential solutions. Maybe there are more, but there are three that I'm aware of at this point to move forward with this matter.

Is someone prepared to make a motion in regard to at least the first part, subsection 22(2)?

Mr. Dusseault: I would favour option the first or the second, to ask for clarity in the legislation, to ensure that the law is sufficient for the regulation under 19.

The Joint Chair (Mr. Albrecht): So we would ask them to either amend or create a new act to deal with that?

Mr. Dusseault: Clarify the act that so they have the power to deal with that. It's not clear.

The Joint Chair (Mr. Albrecht): That's the motion on the floor. I want to provide an opportunity for discussion. We all get the different directions we could go. I sensed that this was probably the largest proportion of interest earlier, but I may be wrong. Please feel free if you have any comments, and if not, we're going to vote on the motion.

I know Mr. Di Iorio disagrees. Do you want to speak to that?

Mr. Di Iorio: I do not agree. The regulation is valid, I believe, as I indicated. What is the rule? Well, the rule is in 22(1). We have it in front of our eyes here, so it's paid with the monies that come from the estate of the bankrupt employer. That's the rule.

What is the exception? Well, the exception is in subsection (2), which leaves it to the regulation to list the exceptions. Section 19 of the regulation is an exception. It says that it will be paid by the government in those circumstances. It is a valid as regulation.

The Joint Chair (Mr. Albrecht): We will go to counsel, and then back to Mr. Dusseault.

Ms. Borkowski-Parent: I agree in that the rule is paid by the estate and then the exception is paid by the government. The distinction that counsel sees, and that the department does not see, is as to the nature of the fees that may be paid.

Counsel's opinion is that the fees that can be paid, even by the government, should there be no assets left in the estate, are the fees related to the administration of the program, not fees related to the general administration of bankruptcy.

This is a very specialized and limited act. It's the Wage Earner Protection Program Act, and the Wage Earner Protection Program Regulations, so does that enabling provision, section 22, give you the right to disburse fees that do not deal with that act? That's where the distinction lies. It's not in who pays the fees. That is clear, as you mentioned. It is what fees are to be paid.

My interpretation is that because of the proximity of subsections (1) and (2) — and I know there was a mention in the opening remarks that there could have been a cross-reference between subsections (1) and (2) clearly, and because it wasn't there, it means that subsection (2) stands on its own — it's not a good legislative drafting practice, I can tell you that. You don't cross-reference one section after another. That's a no-no in drafting. But there it stands

That's our interpretation. They have a different one, and you seem to have a different one as well. I just wanted to point out that it's not who pays the fees; it's what fees can be paid under that provision.

Mr. Di Iorio: I agree, but if we look at 22(1), the fees under 19 are the fees in 22(1). Yes, it's that kind of money, and in that money, there's no money to pay for that in the estate, and therefore it's paid by the government under 22(2). It is the same fees that normally would have been paid under 22(1), when there is no money in the estate. Therefore, who will pay those fees?

We look and find the answer in section 19 of the regulation. It says that the government will pay those fees. So what gives authority to adopt section 19? Subsection 22(2) gives that authority. That's why I used the example that the law says it could say the government has the authority to determine the colour. Well, this is what 22(2) says. It doesn't say the government has authority to determine the colour of the walls. So it's not restricted to the wall. It could determine the colour of the wall, the ceiling or the floor. In 22(2), there is no restriction as to what kind of regulation you can adopt, as long as it's going to be attached to the legislation. And obviously it can be attached to the legislation because that specific payment is even contemplated in 22(1). Those very services that are paid under 19 are contemplated in 22(1).

Ms. Kirkby: Subsection 22(1) specifically refers to ". . . the trustee's or receiver's fees and expenses, in relation to the performance of their duties under this Act . . . .'' That's reimbursed under section 18 of the regulations. Section 19 is other duties. If you look at what is authorized, those specific fees in relation to the performance of their duties under the act are in section 18. Section 19 is something else and doesn't appear to be contemplated.

Mr. Di Iorio: What other?

Ms. Kirkby: Well, we don't know.

Ms. Kirkby: They are saying that they have authority to prescribe anything else.

Mr. Di Iorio: What is 19?

Ms. Borkowski-Parent: Section 19 is anything else that deals with an estate but that is not related to the duties.

Mr. Di Iorio: But they said they paid it once under 19, and what they paid were the fees.

Ms. Borkowski-Parent: For example, if I may go concretely, they mentioned that under WEPP, the receiver has to send the information to Service Canada for the payments to be made. They have to go through the payroll and there's an associated fee associated. That's reimbursed under 18.

In an effort to entice receivers to take those low- or no-asset estates, the section provides for the reimbursement of fees that relate to the administration of the estate generally, not just to the program, so whatever the process is for bankruptcy, like publishing notices in the newspaper and filing other documents, which are related to bankruptcy generally but that are not related to the WEPP program.

Mr. Di Iorio: With the ultimate objective of giving money to wage earners who didn't get their wages. That's the ultimate objective, and the performance of their duties is mentioned in 22(1). So under 19, the one example that they used, the one single item that happened in 10 years, could also be attached to 22(1), except for the fact that there was no money in the estate, and that's why the government footed the bill.

Ms. Borkowski-Parent: Generally speaking, regulations cannot extend a power to spend money. That has to be expressly provided for in the act because you can imagine that departments will always interpret to the largest extent.

Mr. Di Iorio: It says so: "pay the fees or expenses.''

Ms. Borkowski-Parent: In relation to the act.

Mr. Di Iorio: Well, it doesn't say that. It says, "The Minister shall . . . pay the fees or expenses. . . .'' So I agree with you: The legislation gives authority to pay the fees and the expenses, specifically, and it gives the authority to enact regulation to pay fees and expenses, and that's exactly what they did.

Mr. Oliver: I read that subsections (1) and (2) are about how to get payment, not what should be paid for. So subsection (2) allows the minister to make payments where there are insufficient funds in the estate. It doesn't change what can be paid for. It just determines that the ministry can pay it.

I don't have the regs in front of me, but I'm assuming that 18 sets up that authority for the minister to make a payment to a receiver where there are insufficient funds in the estate; is that right? Does 18 do that?

Ms. Kirkby: In relation to the duties and payments under the act, yes.

Mr. Oliver: Yes, 18 does that. It makes provision for payment, so 19 is actually changing what can be paid. That's what I heard the woman answer, that there are different things they want to pay in 19. It's not about how it's paid. They are changing the scope of what can be paid and that it goes beyond the WEPP, and that's the problem. That's how I read this.

Senator Wallin: I just heard it to mean they may need an incentive for those who do not want to take on low-return cases. So they need that flexibility, but you can't really legislate that because you can't put a number on it. It may be a $1.50 or $1.48, and it depends on who they are dealing with. So there's almost a purpose in not specifying.

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Mr. Dusseault: To respond to Mr. Di Iorio, I understand his interpretation and his perception of subsection 22(2) as being related to subsection 22(1). It is like the exception to subsection 22(1). However, the interpretation we have received is that the two subsections are unrelated and completely separate. So they cannot be interpreted in the way Mr. Di Iorio does — at least not in their opinion. That is why my motion asks that the government clarify the situation.

Clearly, our intent is to ensure that people who need a salary receive a salary if their employer goes bankrupt. That is our ultimate goal around the table, I am sure. However, in our opinion, the legislation is not clear enough. We have three or four interpretations around the table. Therefore, it would be appropriate for the committee to ask that the legislation be clarified to ensure that those expenses are authorized by Parliament. We do not want to find ourselves in a situation where spending is not authorized by Parliament. It is not a question of debating whether those expenses are correct or eligible. It is simply to clarify in the legislation that they are authorized by Parliament.

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The Joint Chair (Mr. Albrecht): I want to add that the presenters themselves, in their penultimate paragraph, indicated that they are willing to clarify it in future legislation.

We have a motion on the floor to request that. I know there's not unanimous agreement, but could we have a show of hands as to who agrees with the motion on the floor? Opposed, same sign? Okay, that is carried.

The other part of this issue that we need to deal with is the timeline. We're going to include that request in a letter.

Mr. Badawey, did you want to add a potential date in terms of the timelines for the last three issues that were raised? September?

Mr. Badawey: I stated earlier that September is fine, yes.

Ms. Borkowski-Parent: A letter to the minister?

The Joint Chair (Mr. Albrecht): A letter to the minister, and that will be from the joint chairs.

Ms. Borkowski-Parent: Correct.

The Joint Chair (Mr. Albrecht): I believe we have dealt with that item. I appreciate your patience.

We are going to move in camera to deal with an issue. I will entertain a motion that the committee now proceed to sit in camera and, notwithstanding the usual practice, that members' assistants be allowed to remain.

Is someone prepared to make that motion? Mr. Motz?

All agreed to move in camera?

Hon. Members: Agreed.

(The committee continued in camera.)