Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills — Issue No. 2

SELECT STANDING COMMITTEE ON PARLIAMENTARY REFORM, ETHICAL CONDUCT, STANDING ORDERS AND PRIVATE BILLS

Present: John Martin, MLA (Chair); Leonard Eugene Krog, MLA (Deputy Chair); Harry Bains, MLA; Mable Elmore, MLA; Eric Foster, MLA; Don McRae, MLA; Sam Sullivan, MLA; Jackie Tegart, MLA; Dr. Andrew Weaver, MLA

1. There not yet being a Chair elected to serve the Committee, the meeting was called to order at 12:13 p.m. by the Deputy Clerk and Clerk of Committees.

2. Resolved, that John Martin, MLA, be elected Chair of the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills. (Jackie Tegart, MLA)

3. Resolved, that Leonard Eugene Krog, MLA, be elected Deputy Chair of the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills. (Harry Bains, MLA)

4. The Committee considered Private Bill, PR 401, World Wide Marriage Encounter Society (Corporate Restoration) Act, 2015.

Luke Johnson, Solicitor and Parliamentary Agent acting on behalf of World Wide Marriage Encounter Society, and Eric Goodwin, Director, appeared before the Committee, via telephone conference call, and answered questions.

5. Resolved, that the Committee report that the preamble of Bill Pr 401, intituled World Wide Marriage Encounter Society (Corporate Restoration) Act, 2015 has been proved and that the Committee recommend that the Bill proceed to Second Reading. (Leonard Eugene Krog, MLA)

6. Resolved, that the Chair present the report to the Legislative Assembly at the earliest available opportunity. (Leonard Eugene Krog, MLA)

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
PARLIAMENTARY REFORM, ETHICAL CONDUCT, STANDING ORDERS AND PRIVATE BILLS


CONTENTS
Page
Election of Chair and Deputy Chair	5
Bill Pr401 — World Wide Marriage Encounter Society (Corporate Restoration) Act, 2015	6
L. Johnson
E. Goodwin
Committee Report to the House	10

K. Ryan-Lloyd (Deputy Clerk and Clerk of Committees): Good afternoon, Members. As this is the first committee meeting of the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills for the fourth session of the current parliament and given that the committee has not yet met this session, the first item of business on your agenda this afternoon is the election of Chair.

K. Ryan-Lloyd (Clerk of Committees): Are there any further nominations? Any further nominations? Any further nominations? Seeing none, I will first ask Mr. Martin if he would accept nomination.

J. Martin (Chair): Thank you so much, and welcome to this select standing committee. I know a handful of you were here last time round. The business we’ll be dealing with later today is sort of similar to what we tackled last year.

J. Martin (Chair): Thank you. Welcome aboard. I look forward to working with you.

J. Martin (Chair): We’ve got one order of business today. Before we bring our guests on board, maybe Kate can give us a brief overview of the objective of the next little while.

As you will know from your agenda, there is a private bill, Pr401, which is before you for consideration today. This private bill was introduced and received first reading in the Legislative Assembly and has been referred to your committee now for the purposes of consideration and review. A copy of the bill is included in the package before you today at tab 2.

The other statutorily required elements of this process have been complied with. Pursuant to the standing orders and the administrative procedures that are required by the Legislative Assembly, all of the other supporting documentation which is required to this point in the process has been fulfilled, is complied with and is included in your binders today.

As the Chair mentioned, we do have a solicitor who is appearing before you by way of conference call on behalf of the society this afternoon, Mr. Luke Johnson. Also on the line to answer any questions that you might have with respect to the declarations made by the society is Mr. Eric Goodwin. They’re both available to you should you have any questions.

Following the committee’s consideration of the bill — in particular, the facts that have been set out in the preamble of the bill — our office has prepared draft motions for your consideration to refer the bill back to the Legislature. We’ll continue at second reading stage. A brief report of this committee to that end has also been prepared, and we’re pleased to circulate copies of the draft motions and draft report at the appropriate time in your work this afternoon.

S. Sullivan: I dealt with a very similar issue, a group called the Urbanarium, in Vancouver. It turned out that they had lapsed, and I was trying to help them to get re-established. What they did was they just ended up, for the sake of ease for everybody, reapplying as a society under the same name, and it seemed to work out.

J. Martin (Chair): I think one thing…. And Kate can probably elaborate on this. One of the complications we went through with a previous similar file is that by restarting the society, they could not access their bank account. That was part of what we were dealing with last time. There might be something else that makes it challenging to go that route.

L. Johnson: No, this is Luke Johnson. I’m a lawyer here in Surrey, and I’m the solicitor for the society involved.

J. Martin (Chair): All right. Luke, you’re going to give us an overview of the subject matter today?

L. Johnson: Yes, that’s right. Then Mr. Goodwin and I are happy to field questions.

Bill Pr401 — World Wide
Marriage Encounter Society
(Corporate Restoration) Act, 2015

As I say, my name is Luke Johnson. I’m a lawyer with a firm in Surrey called De Jager Volkenant and Co. This is my third time to do one of these private member applications over the last few years. I also have with me an associate from my firm who’s listening in.

The society is a registered charity. It provides Christian marriage enrichment programs for married couples. In terms of their operations, they hold weekend retreats in B.C. and Alberta for Catholic couples primarily to attend to learn more about family life, marital communications and similar issues. This is a small organization. They have volunteer directors and no paid staff. They have income from donations and seminar fees of approximately $50,000 per year, with similar expenses every year.

The B.C. society is affiliated with other marriage encounter societies operating in the Prairies, Ontario, Quebec and the Maritimes as well as U.S. and international marriage encounter organizations. They’re actually operating around the world in about 90 countries through various local entities in each country.

The society that we’re dealing with was incorporated under the B.C. Society Act on February 21, 1978. They have certificate of incorporation No. S-13743. As you may know, all societies in British Columbia are required to submit annual reports to the corporate registry disclosing their AGM date and the names of the directors. The society filed one of those annual reports, and then they inadvertently ceased to file them in 1979.

A society that ceases to file these reports is eventually struck from the registry for failure to file, and that is what happened in this case. It was struck from the corporate registry in 1986. There was some issue in terms of the contact address for the society or something like that, because they didn’t receive any of the notices that the registry would have provided notifying them about the requirement. It’s not clear why they didn’t do the filings. Probably, because they had volunteer directors and the instructions weren’t passed on to the proper person, the filing requirement was overlooked.

None of the current directors, or actually anyone involved in the organization, was with the society at that time, approximately 30 or 35 years ago. Being struck from the corporate registry, of course, means that the society ceases to exist, and they ceased to exist as a corporate entity in 1986.

This private bill would restore the corporate registration for the society once they file their outstanding 34 years’ worth of annual reports and pay the necessary filing fees. The outstanding annual reports have been prepared. If the society had been struck for less than ten years, then they could have been restored through an administrative process or a court order, but beyond the ten-year limit, they’re required to go through this private-bill process.

Kate, you were commenting on Bill 24, the new Societies Act, and I’ll comment on that, because it actually resolves this issue and does away with this process that we’re engaged in now.

The directors and members of the society have remained unaware of the filing requirements throughout these last 30-odd years. They didn’t realize that the society had been struck. They did not take out any mortgages or other steps that would have required them to obtain proof of their current corporate existence. They did continue to carry on the charitable activities. They followed the constitution and the bylaws. They held AGMs. They elected directors and generally continued their operation.

The directors became aware of the filing requirement in the fall of 2014, realized that the society was no longer incorporated and took these steps to have it restored. Restoration will allow the society to carry on its work as an incorporated entity with the benefit of limited liability.

The society has minimal assets and no real estate, so the Escheat Act does not apply here. There’s no property of the society that would have reverted to the Crown at the time of dissolution. Following this process, the society does not need to apply to the Crown for return of any assets, any real property. The society has no outstanding debts or liabilities, and no one will be prejudiced by the restoration.

The society registered as a charity with the Canada Revenue Agency shortly after incorporation in 1978 and has operated as a charity continuously. They remain in good standing as a charity. They’ve filed all of their annual reports to CRA, and they’ve been issuing tax receipts to donors since 1978.

Now, charities are not required by CRA to be incorporated as a condition of registering as a charity, but charities that are incorporated are required to maintain their
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corporate status. The society realizes now that dissolution has placed their charitable registration at risk.

To respond to the initial question, this is potentially one of the differences between the society that was referred to that chose not to proceed with restoration. Because the organization has been a registered charity and has been issuing charitable receipts, they didn’t want to create a situation where there was ambiguity about whether or not those charitable receipts were properly issued and whether or not the organization was legitimately a registered charity at the time that the receipts were issued.

Because the restoration is retroactive to the date of dissolution, the restoration of the society will regularize the issuance of the charitable donation receipts that they have provided to donors and generally bring them back into compliance with CRA. The society will notify CRA once the restoration is completed and confirm that this work has been done.

The application, as you can imagine, has required substantial time and expense from the society. The directors are now well aware of the filing requirement, and they’re not going to forget to file their annual reports again.

As I mentioned at the beginning, this is my third time to appear before the committee regarding a private bill. I also dealt with the Gospel Riders Motorcycle Ministries corporate restoration in 2011 and then an organization called Trustee Board of the Church of God corporate restoration act in 2009. I’ve seen that there have been several other similar files in 2014, 2013, 2008.

The new B.C. Societies Act that has been introduced during this session as Bill 24, on my understanding of the act, does away with this requirement for a private bill to resolve this type of situation for an organization that has been struck for more than ten years. In my view, that’s an excellent change.

What organizations would need to do under the new act is apply to court for court approval of this. In my view, that would be faster, more efficient and cheaper for organizations to go through. I think a court is well positioned to make any decisions about whether there’s prejudice to creditors or other issues that could be resolved as part of the restoration application. I would support the change, the introduction of the new Societies Act and the way that it addresses this situation.

I’d also like to acknowledge the assistance of Member Sue Hammell, the Member of the Legislative Assembly for Surrey–Green Timbers, in assisting the society by introducing this bill.

Those are my submissions, subject to any questions that you may have. As I say, the purpose of my submission is to establish that the matters referred to in the preamble to the bill have been proved and resolve any questions you may have about this.

E. Foster: Thank you for the submission. I’ve sat on this committee off and on now over the last six years, and with the submissions for restoration of societies, you could just kind of textbook the preamble because it’s always the same. Thirty years is a long stretch. I would suggest to Mr. Goodwin that somewhere along the line you develop a handbook for your directors and insist that it gets passed on from director to director, chair to chair or secretary to secretary. If not, you’ll be back in the same boat in ten years’ time. Just as a comment as opposed to a question.

E. Goodwin: Just to comment to that, we actually do have policy manuals at pretty much every level of our society. Unfortunately, this just never made it in there. I can assure you it’s in there now, so this won’t happen again. We’ve already taken that step.

A. Weaver: I must admit I have some troubles with this. This is not 12 years, 13 years. This is 34 years. I have a question, then. In your experience, have we ever, as a Legislature, dealt with a restoration at this time scale before, to your knowledge?

L. Johnson: Perhaps not quite this long. In the other application I dealt with — the Trustee Board of the Church of God, Richmond Municipality, B.C. (Corporate Restoration) Act of 2009 — I believe it was a comparable time scale. I don’t have that…. I don’t quite know the number of years, but it was at least two or three decades, I believe.

A. Weaver: The other reason why I’m troubled by this is that we are right now — at one o’clock, 1:30 — entering into debate on second reading on Bill 24, which is a Societies Act bill, which this would fall under when that bill is to pass.

I’m troubled about pushing this through, with a bill under debate as well, and wondering what the ramifications to the society would be were this to be not passed now and till such time as they were to apply through the court proceedings, as outlined in Bill 24.

L. Johnson: Right. My understanding is that Bill 24, assuming it receives third reading and royal assent this spring, would not come into force for a year, at the earliest. Then there will be a transition period.

Potentially, if this private bill is not approved for the society, then they’re looking at delay of at least a year and perhaps longer, plus the additional expense of preparing for a court application. Now they have the materials necessary to do a court application, but that’s another legal expense for them to incur and, I would say, frankly not necessary.

As you’ve said, or as someone — the Chair, I believe —
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commented, these applications are routine in some sense. I believe the Legislature deals with one or two every year, and they’re more or less similar in every case. The same type of issues arose ten, 20, 30 years ago, and the societies made these same types of applications.

From my perspective, it’s much better to resolve this right now for the society. There’s no benefit to anyone by putting this off for another year or 18 months. The new Societies Act would rectify the need for this process. There’s no benefit to making this particular organization wait to go through the newly revised process.

Because the Societies Act bill is still under consideration…. Of course, it could be changed at second reading or something like that, though. From my perspective, it’s not certain that the society will be able to take advantage of the new provisions in a year or 18 months, because it hasn’t been finalized yet.

A. Weaver: My final question, then…. I’m, again, troubled that this is a society that has been writing charitable tax status receipts for 33 years, apparently, when they have not submitted annual reports and maintained…. So my question is: what are the ramifications to the society if this private member’s bill today were not to pass, in terms in past charitable-status tax receipts being issued to donors?

L. Johnson: It’s not entirely clear. I would say they are in good standing as a registered charity, so they have duly filed all of their necessary federal charitable filing. It’s not clear to me what position CRA would take in this type of case.

As I’ve said, it’s legitimate for unincorporated entities — a trust, for example — to be a registered charity and to issue charitable receipts. So it’s not inherently problematic for an unincorporated entity to be holding itself out as a charity. That’s legitimate.

I will say they have operated, at least as far as I can tell, in compliance with the operational requirements that apply to registered charities. They’re doing charitable work. It’s operated by volunteers. There are not any particular issues with their operation other than the fact that CRA requires that organizations that have incorporated status maintain that status.

The worst-case scenario, I think, for the organization would be that, if this private bill does not pass and CRA becomes aware of this, they would revoke their status as a charity, and they would need to cease their operation.

L. Krog (Deputy Chair): I appreciate that, for some members, this may appear to be a sort of shocking situation, but I do bring the benefit of my career outside of this place to this meeting today.

As much as it is maybe surprising, it is not uncommon, as Mr. Johnson has suggested in his submissions. It is amazing to me how many societies will struggle on for a very long time with no idea, and membership who have no idea, of the legal requirements necessary to maintain their status. I think Mr. Johnson has made a commendable presentation to the committee today.

The suggestion that we would force them to make application under an act that hasn’t been passed, whose retroactivity may be in question, regardless, after they have gone to all of this trouble, I think would be placing an unnecessary burden on parties who are no more innocent or guilty than any of the other societies that have had to come cap in hand before this committee over the history of this Legislature facing the same extreme difficulties, which are caused by, as Mr. Johnson suggested, often a bit of innocent negligence on people’s parts.

It’s very clear, with the repeated filings with Revenue Canada, that this is not an organization that is attempting to hide its activities in a financial sense. The fact is the provincial registrar of societies — and registry of companies, for that matter — and Ottawa don’t tend to communicate. It’s not required by law. You’re talking about different jurisdictional issues, so it’s not surprising that this thing has carried on as long as it has. Indeed, the fact that it has carried on as long as it has, again, proves the innocence of the parties involved, who’ve been doing their good work for that lengthy period of time.

I appreciate there are some other members who wish to ask questions, but I’m happy to move the appropriate motion, which the Clerk, I gather, has prepared. I don’t think this particular society should be treated any differently than this committee has historically treated others.

If there was some evidence of some untoward activities or something that required social sanction, I suppose I might be of a somewhat different mind. But based on my experience in the legal community, and having worked with a number of charities and societies over the years, these folks have made a boo-boo. They’re going to considerable expense in order to resolve what has been brought to their attention, and, of course, there will be the filing fees received by the province of British Columbia for the annual reports. I don’t think we should be turning down revenue with a government that tells us we’re always fiscally challenged.

This is an opportunity to correct a mistake of the past, provide some revenue and allow this society, which has done good work for 30-plus years, to carry on doing so.

A. Weaver: With respect to the member for Nanaimo, it does behoove us as Members of the Legislative Assembly to do our due diligence and to probe the society for questions with respect to the reasons why it’s been 34 years — the ramifications of Bill 24, which is before us today, as
[ Page 9 ]
well as the implications of charitable status. I, too, have served on this committee. In fact, we had a very similar case last session, and it is a rather different situation here.

So while, of course, I am in support of this bill, I do think it behooves us to do more than rubber-stamp a bill, as the official opposition appears to do, without actually probing the information behind that bill.

H. Bains: Just a few questions. As we know, based on the information that has been provided to us and some in our packages here, the society was struck off the register in 1986. Since that time, the annual reports have been filed, and they’ve been issuing income tax receipts during this period. Would that not make it…? Although the income tax agency and the societies registrar, as was mentioned here, don’t communicate with each other, the fact remains that they were issuing receipts. Unlawfully? Would that make it illegal — issuing those receipts? They had no status as a society, but they were given that authority and recognized as a charitable society in 1978.

My question is: by our action today, are we making those “illegal activities” — of issuing those income tax receipts — legal today? Just a question, and I just need an answer from the lawyers. Maybe Mr. Johnson could explain, or somebody.

The second question is: what prompted them? I mean, 30 years have gone by. What prompted them to realize that we need to go and put the society back as a registered society? What issues, what incidents, happened that prompted them now to take this action?

L. Johnson: I can respond to those. In terms of the first question, I wouldn’t characterize it as saying that they have been issuing illegal receipts. These are not false donation receipts that have been issued. The donations were duly made, and the donations were issued by the organization. It doesn’t rise to the level of being illegal.

What we’re asking the committee to do here and what we’re asking the Legislature to do is to regularize this by retroactively approving the filing of the past 34-odd years of annual reports. You have the authority to do that. That has been done — I’ll say routinely — with the other types of applications of this nature. No, I don’t think that you’re being party to illegal conduct or anything like that. That’s not the situation.

This is resolving a corporate oversight that needs to be addressed so that the organization can carry on. But we’re not trying to pull the wool over CRA’s eyes or anything like that in this situation.

In terms of the second question of what prompted it. The board of directors were, as I understand it, just organizing the records of the society and consolidating documents, bylaws and constitution and those kinds of things, to have proper files for the organization. Someone, one of the directors, eventually realized, “There should be annual reports, and they don’t seem to be here,” which prompted them to inquire with the corporate registry, which provided notice that the organization had been struck and was no longer in existence.

I was able to verify one of the other files that I was involved in of this nature. That organization was actually struck in 1986 as well. The time frame in terms of the organization carrying on without being aware of their dissolution — I guess I would say it’s not unusual.

It does seem like a long time, but organizations like this don’t really have the need to interact with the corporate registry. They don’t need to prove their corporate status to anyone as long as they’re not taking out a mortgage or buying property or doing things of that nature. They didn’t do any of those types of transactions over the last many years and so didn’t have any need to go to the registry and ask for verification of their status or anything like that, which is why they were able to carry on for so long without this coming to their attention.

H. Bains: Mr. Johnson, just a follow-up question on the first part of my question. Where is the law around when a charitable society which does not need the requirement of a charitable society and does not meet the requirement of CRA to issue those receipts…? Where is the law on that? What happens if a society issued those receipts to donors and they file for income tax as exemptions, but they are not entitled to, under the law? Where is the law on that?

L. Johnson: I’m not sure that I can answer that question. My understanding is that under the Income Tax Act if a society like this, a registered charity, is dissolved as a corporation, CRA has an option or authority to revoke that organization’s charitable status. Ostensibly, CRA would have had that authority for the last however many years.

They haven’t exercised it. Like my clients, they weren’t aware of this situation, and so CRA hasn’t had any reason to consider whether or not they should apply that against this charity. If CRA objects to what is being done here, CRA could now revoke the organization’s charitable status.

In May, or whenever we notify them that this work has been completed, I don’t believe that they would have the authority to revoke the charitable status effective 1986 and somehow retroactively throw those donations and donation receipts into question. CRA’s remedy would be limited to revoking the charitable status immediately. In my experience — as I say, I’ve done this before for other organizations — CRA doesn’t take that view. They’re not looking to strike organizations or to challenge donation receipts in the case of innocent overlooking of filings, as in this situation.

On the other two files that I’ve dealt with, I don’t know
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that it’s a matter of formal CRA policy, but I can say that CRA accepted what the organizations had done and allowed them to carry on as registered charities. Both of them are now several years out and carrying on as registered charities with no issues with CRA. My expectation would be that the World Wide Marriage Encounter Society would receive the same treatment from CRA and they would be able, as has been done in the past, to resolve that potential issue to CRA’s satisfaction.

E. Foster: If I could comment, as MLA Krog said, in my life outside of this place I’ve sat on the boards of several societies — although we never had to come to this length because it was discovered in the first year or two that the documents hadn’t been filed.

In a lot of these societies, the boards will change whole scale. Sometimes it’s an amicable thing; sometimes it’s a coup. But then what happens is that addresses don’t get passed on, don’t get changed. The mail goes to someone who has moved, is deceased or doesn’t want anything to do with the society. That’s quite often how these things occur.

Again, for the couple of societies that I sat on, we had to backfile. But there was never, ever a question about the status of the charity because the feds didn’t have any kind of an issue with it. It’s not uncommon.

L. Krog (Deputy Chair): I move the committee report that the preamble of Bill Pr401, intituled World Wide Marriage Encounter Society (Corporate Restoration) Act, 2015, has been proved and that the committee recommend that the bill proceed to second reading.

K. Ryan-Lloyd (Clerk of Committees): Just by way of clarification, we will circulate a copy of the draft report of your committee, reporting out to the Legislature of your approval of the preamble of the bill. Susan is distributing that now, and I will circulate a related motion to have that report presented to the Legislative Assembly.

L. Krog (Deputy Chair): I move that the Chair of the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills present the report to the Legislative Assembly at the earliest available opportunity.

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Chair:	John Martin (Chilliwack BC Liberal)
Deputy Chair:	Leonard Eugene Krog (Nanaimo NDP)
Members:	Harry Bains (Surrey-Newton NDP)
	Mable Elmore (Vancouver-Kensington NDP)
	Eric Foster (Vernon-Monashee BC Liberal)
	Don McRae (Comox Valley BC Liberal)
	Dr. Moira Stilwell (Vancouver-Langara BC Liberal)
	Sam Sullivan (Vancouver–False Creek BC Liberal)
	Jackie Tegart (Fraser-Nicola BC Liberal)
	Dr. Andrew Weaver (Oak Bay–Gordon Head Ind.)
Clerks:	Kate Ryan-Lloyd
	Loredana Catalli-Sonier

REPORT OF PROCEEDINGS(Hansard)

SELECT STANDING COMMITTEE ON PARLIAMENTARY REFORM, ETHICAL CONDUCT, STANDING ORDERS AND PRIVATE BILLS

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
PARLIAMENTARY REFORM, ETHICAL CONDUCT, STANDING ORDERS AND PRIVATE BILLS