Parliament Hill hearings opened this week on new Canadian Wheat Board legislation and one of the key points of debate will be protection proposed for board employees against civil or criminal financial liability brought against them for their CWB work.
CWB minister Ralph Goodale insists the law would extend to wheat board employees “virtually identical” protection from liability offered to directors and officers of private corporations under the Canada Business Corporations Act.
Last week, several lawyers read the new bill and disagreed with the minister. It offers more protection to more people than does the law governing the private sector, they said.
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“In this respect, the bills are substantially different,” said Rob Flannigan of the University of Saskatchewan college of law. “I don’t think the protection offered is virtually the same. It’s not accurate to say they are.”
Anthony VanDuzer, a business law professor at the University of Ottawa law school, agreed. “There are significant differences.”
Critics say the government is extending too much protection against liability, offering what the National Citizens’ Coalition suggests is a licence to break the law.
While the charge brings a heated denial from Goodale, opposition MPs say the indemnity clause will be one of their targets during parliamentary hearings.
At the heart of the dispute is section 3.13 of the CWB Act that says the board “shall indemnify a present or former director or officer of the corporation or a person who acts or acted at the request of the corporation … against all costs, charges and expenses” incurred in a judgment against them in a civil, criminal or administrative action.
The bill says the costs would be covered as long as the person “acted honestly and in good faith with a view to the best interests of the corporation.” If it was criminal or administrative action that led to the fines, judgment and cost, they would have to have “believed on reasonable grounds that their conduct was lawful.”
Goodale says those protections are patterned on protections provided to private corporate officers.
The lawyers disagree with him on two main points:
- The CWB bill would make indemnification mandatory while the corporations legislation makes it discretionary. “The difference between a discretionary indemnity and one that is available as a right is a significant one,” said VanDuzer.
- The CWB indemnification obligation would extend to board officers, directors or anyone who acts for the corporation at its request. That could include employees or agents and therefore significantly expands the group protected, said Flannigan.
“I have only looked at that specific section but it is substantively different when compared to the CBCA,” he said.
