Evidence of meeting #15 for Agriculture and Agri-Food in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was buyer.
A recording is available from Parliament.
Professor, College of Law, University of Saskatchewan, As an Individual
It is my understanding that they do, yes.
Liberal
Francis Drouin Liberal Glengarry—Prescott—Russell, ON
Okay. Great.
Could you talk to me about some of the features of the act? You consulted with the industry to draft this act, and in your opinion, you're certain that it respects the Constitution and the powers within the Constitution, as I heard from your opening statements.
Professor, College of Law, University of Saskatchewan, As an Individual
I have no doubt about that. The Supreme Court has been very clear over the years that once a debtor becomes insolvent, this falls within the provisions of the Constitution Act that give jurisdiction over insolvency to the federal Parliament. I have no doubt whatsoever of its constitutionality.
Liberal
Liberal
Conservative
Jacques Gourde Conservative Lévis—Lotbinière, QC
Thank you, Mr. Chair.
Thank you for being with us, Mr. Cuming.
Between the buyer and the seller, there is the trust, and the trust has a guarantee from the buyer for a certain amount of money.
But are there any checks in place?
Sometimes buyer turnover increases fairly quickly, without their going back to the trust—
Professor, College of Law, University of Saskatchewan, As an Individual
I wouldn't describe it as a guarantee. The way it would operate is simply this. When the buyer acquires product from the seller, and then resells it—or maybe doesn't resell it, but we know this is perishable goods, so it will be resold—and receives something in return, which could be cash or could be an account receivable, but whatever that property is, it will be subject to a trust.
In other words, the buyer is under legal obligation to recognize that the property is beneficially owned by the seller until the seller is paid. It's not a guarantee, as I mentioned. If the buyer sells the product and gets cash, and spends the cash, dissipates the cash, then of course there's nothing for the trustee to attach to. Therefore, the seller is not protected. It's only when there is property that the buyer receives from the disposition of the product; it's only when that property is identifiable and can be protected that the system will operate.
Conservative
Jacques Gourde Conservative Lévis—Lotbinière, QC
It may be that an American buyer buys products from Canadian farms, but becomes insolvent fairly quickly for some reason.
Is there anything in place to prevent this kind of situation or is it just practically a done deal every time?
Professor, College of Law, University of Saskatchewan, As an Individual
If the buyer is an American buyer, then U.S. law applies. The Canadian supplier would get whatever protection that law provides. We hope, then, that if this act were passed, the USDA would declare that the U.S. system would protect that Canadian seller.
Now, if it's the other way around and it's a U.S. seller and a Canadian buyer, this act would protect the U.S. seller. It's complete reciprocity.
Conservative
Liberal
Liberal
Lloyd Longfield Liberal Guelph, ON
Thanks, Mr. Chair.
I'll also declare that I'm not a lawyer, and I'm having a little difficulty keeping up with some of the language, but Mr. Peschisolido is sitting right beside me, which is a wonderful thing, always. I may be sharing some of my time with him.
I want to go to the two previous meetings that we've had, one on May 9, where we talked about the volume of risk that we're trying to manage here, and the Conference Board of Canada saying that our payment claims were about $479,000 last year, and that it had actually gone down from 13 claims to 10 claims.
The next meeting we had, on May 16, we were speaking with Mr. Webber about the volumes again, the $479,000 that was on an export of $1.54 billion, but that there were also about $18 million to $25 million a year of other claims.
What I'm trying to understand from this is whether we're separating out what the federal jurisdiction has in risk and what the provincial jurisdiction has in risk. It seems to me that the federal portion is a lot smaller than the provincial, but it seemed you had a different take on that. Could you clarify that for me, please?
Professor, College of Law, University of Saskatchewan, As an Individual
You will have to forgive me by noting that I approach this from a technical legal point of view. In other words, I don't deal with the economics in terms of the volumes of claims.
However, let me answer by saying this. Under this system, whatever the volume, it doesn't matter whether you characterize it federally or provincially, this act would apply to all unpaid suppliers, whatever quantum of interest they may have. So there's no jurisdictional breakdown when it comes to the application of the act. If you're an unpaid supplier and you comply with the act, you get this protection, wherever you are in the country.
Professor, College of Law, University of Saskatchewan, As an Individual
Yes, well, insolvency—
Professor, College of Law, University of Saskatchewan, As an Individual
I'm sorry, I missed your question.
Liberal
Lloyd Longfield Liberal Guelph, ON
That sentence would be: the federal part of this would be applying to cases of insolvency.
Professor, College of Law, University of Saskatchewan, As an Individual
Yes, I'm sorry, you're quite right; I should have made that qualification for sure. Yes.
Liberal
Lloyd Longfield Liberal Guelph, ON
Thank you.
I have just have one more on my time, then it's over to Mr. Peschisolido.
Early in the study I had mentioned maybe an opportunity where in the comprehensive agriculture program that's being discussed, or will be discussed, between the provinces and the federal government, maybe this risk management could be part of that discussion where the provinces and the federal government are trying to determine joint risk in agriculture. Would this topic be something that you could see falling within the comprehensive agriculture program?
Professor, College of Law, University of Saskatchewan, As an Individual
Again, I must apologize; as a technical lawyer, I'm really not competent to deal with what is really a political issue. But let me say this. If there is a solution that will satisfy the Americans, in my opinion it will have to be one that follows this approach. In other words, ultimately, any solution has to be implemented in law. As I understand it, this is the only way Canada could do it on a nationwide basis and satisfy the Americans. Indeed, I'm not suggesting that the satisfaction of the Americans is the sole objective here, but it's the approach that works.
Liberal
Lloyd Longfield Liberal Guelph, ON
Great. Thank you very much.
By the way, thank you for coming. I should have said that earlier. We were really looking forward to it. Your name had been mentioned in every meeting we had. It's great to meet you face to face, virtually.
Professor, College of Law, University of Saskatchewan, As an Individual
It's my pleasure.
Liberal
Joe Peschisolido Liberal Steveston—Richmond East, BC
Mr. Longfield, thank you.
Just following up on Mr. Longfield's line of questioning, based on your 50 years of expertise in law and developing statutes and regulations for insolvency and secured transactions, you don't believe, looking at your proposed law and what exists in the United States, there's any technical legal impediment for the Americans looking at this and saying, yes, this is a comparable system?
