CONSUMER AND CORPORATE AFFAIRS
Mr. Deputy Chairperson (Ben Sveinson): Will the Committee of Supply please come to order. This section of the Committee of Supply will be considering the Estimates of the Department of Consumer and Corporate Affairs. Does the honourable Minister of Consumer and Corporate Affairs have an opening statement?
Hon. Jim Ernst (Minister of Consumer and Corporate Affairs): Mr. Chairman, I am pleased to introduce the Estimates of the Department of Consumer and Corporate Affairs for '96-97. My statement will focus on some highlights of the past year and of this year's activity.
One of the main changes, Mr. Chairman, has been the transfer of the Property Rights Division to my department from the Department of Justice. The division comprises the Land Titles Office and the Personal Property Security Registry. It has 157 staff-years with more than $6 million in salaries and $1.8 million in operating funds and virtually doubles the size of the department.
One of the reasons for the transfer, Mr. Chairman, is that their services are an excellent fit with our registry programs such as the Companies Office and the Vital Statistics Agency. In addition, their target populations are similar. Since the two branches are new to the department, I would like to say a little bit about them. In the Land Titles Office about 150,000 instruments and 60,000 titles are registered and created every year and worth about $2.5 billion in transfer values and $5.5 billion in mortgage securities.
About $10.5 million is collected annually in land transfer tax and an additional $6.5 million in fees. Six Land Title district offices report to the registrar of general property rights, including a Surveys branch in downtown Winnipeg. The Winnipeg office accounts for about 80 percent of the system's revenue and 75 percent of all recorded registrations. Other district offices are located in Brandon, Dauphin, Morden, Neepawa, and Portage la Prairie.
The primary purpose of a land titles system, Mr. Chairman, is to provide certainty of ownership of interest in land and to simplify proof of ownership. The district offices also administer and collect land transfer tax under The Revenue Act. They supply records to the Assessment branches of the City of Winnipeg and Manitoba Rural Development and act as subdivision and farmlands' ownership control points for other areas in the government. Records from Vital Statistics and the Companies Office are routinely registered in Land Titles Offices as proof of matters relating to a registration.
The Personal Property Registry, Mr. Chairman, records and provides information on corporate securities, appointments of receivers, and security interests in collateral under The Personal Property Security Act. It provides a central registry for liens having priority under The Garage Keepers Act, The Payment of Wages Act, and The Summary Convictions Act. It is also used for government liens on personal property under seven tax acts.
The registry has two primary client groups. Consumers use it to ensure there are no hidden liens against personal property they want to purchase. Banks, credit unions, financiers, lawyers, wholesalers, and retailers need an efficient registry for recording security interests in collateral.
Mr. Chairman, several years ago my department helped develop the Canadian Motor Vehicle Arbitration Program. Through CAMVAP, consumers experiencing problems with defects or warranties in new vehicles can apply for arbitration as an option to going to court. Arbitrators can award buy-back or replacement of the vehicle, repairs, compensation for repairs already made, limited out-of-pocket expenses, or find no liability on the manufacturer's part at all.
CAMVAP began in Manitoba in October of 1994. As of the end of 1995, it had resolved 31 cases. Of these, 20 were through arbitration, nine through mediation, and two during the hearing process. Along with other awards, the 20 arbitrations resulted in four vehicle buy-backs and one replacement. Steps are being taken to ensure CAMVAP continues to operate well. One of these steps is a consumer satisfaction survey being conducted among users. This fall there will be an independent review of that plan.
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Mr. Chairman, our consumer education program is very active. My department recognizes the practical value of consumer education and is committed to helping families function in our fast-changing economy and expanding marketplace. That is why my department spearheaded the recent creation of a Canadian Consumer Education and Information Forum. The 35 members are a group of consumer professionals and educators from across Canada drawn from the academic community, schools, business and consumer groups, federal and provincial governments plus community help agencies. The forum provides opportunities to share research, ideas and resources and work on joint cost-effective projects. Examples are the interactive Internet website for consumers and consumer educators that will soon offer up-to-date Canadian information, lesson plans and references for high school teachers. This is an ambitious initiative created to address pressing marketplace needs. It also meets the needs of consumer specialists and educators who, like all of us, are doing more with less.
Mr. Chairman, I would like to mention briefly the senior crime and safety network, a new initiative of our Consumer Education branch to strengthen our efforts against consumer fraud. I am proud that we were instrumental in forming this new partnership with seniors agencies, Winnipeg police, RCMP, Citizens for Crime Awareness, Crime Stoppers, Manitoba Justice and the Seniors Directorate. It links us with other agencies and services concerned with crime prevention. We are pleased that the network has already strengthened program partnerships and identified opportunities for joint projects.
Mr. Chairman, in the Residential Tenancies Branch we are now working towards expanding the volunteer speakers program to include workshops for high-risk renters. We are developing a one-hour teaching package for volunteers to use in community workshops. It includes handouts, activities, transparencies and several active teaching techniques that relate to adults' renting experiences. The next phase is assigning staff and resources to the program, recruiting and training volunteers and to promote the workshops to community groups.
Another commitment I made last year was a comprehensive policies and procedures guidebook to help both tenants and landlords understand how Residential Tenancies Law is applied and the policies the branch uses in its daily operations. I am pleased to say the guidebook was recently completed. It will be used by staff and will be available to tenants and landlords. I would like to note that it is in plain language which will make it easy to use and the material easy to understand.
The guidebook deals with matters concerning the legislation, such as security deposits, rent increases and notices by landlords and tenants. It has information on tenants' and landlords' rights and responsibilities, mediation and hearings. Besides being a comprehensive source of information for landlords and tenants, the guidebook will be used to train new staff and as reference for experienced staff. We think it will be a useful, practical tool for making consistent decisions.
Finally, I have referred to the company's office during my statement. This is the former Corporations Branch , which became a special operating agency on April 1 under its new name. As an SOA the company's office can concentrate on improvements and introduce necessary technological changes without the usual government restrictions. In my department the office joins the Vital Statistics as an SOA. Mr. Chairman, that concludes my opening remarks.
Mr. Jim Maloway (Elmwood): Mr. Chairman, I think this year I will dispense with the opening comments, and if I could get the agreement of the minister, perhaps, we could deal with the Estimates in such a way so as I could ask questions under any area of the department. I know that that has been done now in Highways and a couple of other Estimates.
Mr. Ernst: In principle I do not object, although we have, as you can see, a wide variety of staff here to provide--we have a brand new deputy minister, as you may know. Let us try it and if it creates a problem, we will have to revert to the old way.
Mr. Maloway: The reason I ask, and the minister may know better than I, I am not certain how many hours have been allocated for these Estimates, as to whether we are anticipating being finished at 5:30, or whether in fact we are going to be continuing on until tomorrow.
Mr. Ernst: I have got as many hours as it takes, but your House leader might have some other suggestion.
Mr. Maloway: In the absence then of confirmation from my House leaders as to what time we have in mind, I had planned to ask a series of questions in one area and if time permits afterward I would go into other areas. That is why I did not want to find myself with a shortage of time at the end if we had to finish by 5:30. So that was the reasoning behind the request.
Mr. Ernst: If you would like to indicate which kind of area you wanted to ask questions, then I can have the appropriate staff approach me.
Mr. Maloway: Currently it would be the Public Utilities Board.
Mr. Ernst: Well, Mr. Chairman, the Public Utilities Board is an independent, arm's-length organization. We have no staff here for that. I could answer as many questions as I can with respect to its operations.
Mr. Maloway: The Public Utilities Board is listed under Corporate Affairs, and if the minister is prepared to take questions on that area, then I think that is quite acceptable to me.
Mr. Deputy Chairperson: The honourable member for Elmwood, are you going to have an opening statement?
Mr. Maloway: I would like to begin by asking the minister--
Mr. Deputy Chairperson: Order, please. You are going to start with your questions then, are you?
Mr. Maloway: Yes.
Mr. Deputy Chairperson: Okay, then let me just catch up. Under Manitoba practice, the debate of Minister's Salary is traditionally the last item considered for the Estimates of the department. Accordingly, we shall defer consideration of this item and now proceed with consideration of the next line. Before we do that, we invite the minister's staff to join us at the table and we ask that the minister introduce his staff present.
Mr. Ernst: Mr. Chairman, I would like to introduce Alex Morton, who is the newly appointed Deputy Minister of the Department of Consumer and Corporate Affairs. She previously was the Registrar General under the Land Titles Office and the Personal Property Registry. She is a lawyer by profession, although we will not hold that against her. Of course, Fred Bryans, I think, is known to all members, who is our administrative officer.
Mr. Deputy Chairperson: We thank the minister. We will now proceed to 5.1.(b)(1) Executive Support, Salaries and Employee Benefits, on page 25 of the main Estimates book. Shall the item pass?
Mr. Maloway: I thought we had agreed that I would be allowed to ask questions.
Mr. Deputy Chairperson: Agreed.
Mr. Maloway: I am sure the minister will have to take some of these questions as notice in order to obtain the material for us, but I think what we are interested in knowing is what sort of reporting that the MPIC would provide to the PUB in support of its rates applications each year. Currently, as the minister knows, we are trying to get the minister in charge of Manitoba Public Insurance Corporation to provide us with actuary reports dealing with the $29 million and now $49 million in tort claims before March 1, 1994. We are unable to get the proper responses and proper information from that minister.
Suggestion has been made that, in fact, some of the actuarial reports may have been submitted to the PUB. So I would ask the minister if he would endeavour--I am making the assumption that he would not be aware that these actuarial reports had been given--on the part of this committee to obtain for us all actuarial reports submitted to the PUB on behalf of the MPIC rate increase application?
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Mr. Ernst: Well, the member is right, Mr. Chairman. I have absolutely no idea what information is submitted to the Public Utilities Board. Historically, the Public Utilities Board, notwithstanding that the members are appointed by government, operates in an independent arm’s-length manner from the government. These are highly complex matters, and reams of information, generally speaking, I think, are provided from what I know. I freely admit, I have never been to a Public Utilities Board meeting where they were considering an application from any of their client groups. I understand they are quite complex, and all kinds of information are provided. I will certainly ask of the Public Utilities Board what information is available.
Mr. Maloway: Mr. Chairman, I suppose they can be as complex as they want to be, but, at the end of the day, if they are not able to obtain accurate information concerning a figure such as this 29 million or 49 million, if they are not given the actuarial reports, then how are they possibly going to be in a position to be able to accurately predict what the rates would be?
I think that is what we are really trying to find out here. If the corporation provided the actuarial reports to the PUB and on that basis they made a decision, then I would be very happy to take it up with the PUB. If that is not the case and there were no reports given to the PUB, then I will be happy to take it up with the minister in charge of MPIC, but I am not convinced that, certainly, correct reports were forwarded to the PUB. Clearly, that is the case.
Mr. Ernst: I will endeavour to find out.
Mr. Maloway: Mr. Chairman, now the member is aware of the track reports. I am sure he knows what they are; a series of eight and early warning signs to test the solvency of a corporation. What we found shocking about this system--and you must understand that the track report is a voluntary reporting system. Why the Manitoba Public Insurance Corporation would voluntarily turn over financial information that it would know in advance would only allow it to pass two of eight solvency tests is a question that I certainly cannot answer, and I would like to know the person who made a decision like that. Nevertheless, they did provide this information.
Now, given that they provided the information, we have been asking why it is that the corporation would recommend that the minister would support a rate reduction in view of these track reports, which show that the corporation is in bad shape. What I would like to know is: Were these track reports ever passed on to the PUB for their decisions? When they made these decisions, did they have copies of the track reports, did they have copies of the actuarial reports? Because if they did not, it is clear to see how they could have made a decision; if they did have them, then it is mind-boggling that they could make the decision that they did.
Mr. Ernst: Well, I do not know whether they did or did not, and I will endeavour to find out.
I should point out, though, that if you have ever seen a decision by the Public Utilities Board with respect to any of their rate application considerations, they are quite exhaustive in terms of the amount of information provided, running 60, 80, 100, 150 pages, in some cases, of report, but I will endeavour to find out the answer to the question.
Mr. Maloway: Mr. Chairman, I certainly would not dispute, having sat through some PUB hearings, the fact that there is quite an involved, complicated process involved over there and certainly a costly process, but at the end of the day, if vital information that is material to the decision is hidden, or is sat on, by people in the government who are essentially conspiring to gain an end in this being the reduction of the premiums before an election, to win an election, then that is a different matter.
Mr. Deputy Chairperson: Order, please.
Point of Order
Mr. Ernst: Mr. Chairman, on a point of order.
Mr. Chairman, I ask you to ask the member for Elmwood not to make unfounded allegations in the committee here. He can surmise all he wants, but to make unfounded allegations is inappropriate.
Mr. Deputy Chairperson: The comments made by the member for Elmwood I believe started out with the word “if” and as such I will rule at this time that the minister does not have a point of order, but I would ask the member for Elmwood and any other members of the committee to choose their words carefully.
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Mr. Maloway: Mr. Chairman, I did not mean to rile the minister, and it was my finishing comment to this particular area.
I would like now to go into the subject area involving the, I guess, recent uncovering of a land/house-flipping scheme operating in the city. I am not certain just what section of the Estimates that we would be dealing with under this section, but nevertheless I would like to ask the minister when he became aware of this ring of house-flippers working in this town and why he did not issue a public warning that this sort of operation was going on. I would just like to get his initial comments on this first.
Mr. Ernst: Well, Mr. Chairman, I learned about it when I read about it in the paper. There is no specific tracking system that would identify every transaction in the Land Titles Office which I might indicate only came to our department from Justice on the first of April, which postdates that business by some time. I am advised by the staff that with respect to the transactions that occur in Land Titles Office, it is on an individual transaction basis. There are quite legitimate transfers of land that occur from time to time within short periods of time with a variety of considerations attached to them.
Mr. Maloway: Mr. Chairman, I actually asked that question last fall and I am still waiting for an answer. Maybe we can get into that now, and that is, there appeared to be in a number of the same-day transfers--and they were not all same-day transfers in which it appears as though the province in effect lost out in the land transfer tax, the collection of land transfer tax. I am wondering how that could happen, and that is why I asked the minister to investigate that element of it, because we are talking nearly a hundred transactions here, not all of which of course have missing fees.
Mr. Ernst: Well, first of all, let me say that as I indicated in my opening remarks, there are some 150,000 transactions occur in the Land Titles Office on an annual basis. So for a hundred to be of some concern to the member does not represent a very large percentage. At the same time, there should not be any missing land transfer tax in the process.
Mr. Maloway: Given that his department would have more or less a complete list of the transactions involved, then I would think that would narrow down the field as to the ones that we are interested in, in this particular case.
Mr. Ernst: Well, we have thousands and thousands and thousands of titles. Which ones are the ones that are involved?
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Mr. Maloway: I would think that the minister would be aware of that when his department gave him the list. I know the minister said he read about it in the paper; that is how he found about it. But I would like to know when and how the department actually found out about it.
Mr. Ernst: Mr. Chairman, when an individual title comes into the department or the transfer of an individual title, it is assessed on the face value of the title. If a transfer came in one day for a property at a certain value and three days later another transfer came in for the same title with a different value, generally speaking, we would not know one versus the other and would not correlate them.
If they came in together, two transfers came in together, one from party A to party B, and one from party B to party C, we, generally speaking, would tax on the higher of the two values. But there is an option, from time to time, if there is an indication that something is untoward, that a determination could be made on the question of what tax is payable or what value is taxable, shall we say.
Mr. Maloway: My question is really, when did the department learn of the problem? The minister is claiming that he was not aware of it till he read the story that was run in the paper, I believe it was December 7, and clearly the CMHC newsletter was sent out June 1994 basically talking about this operation, so what I would like to know is, why did it take so long? I mean, clearly, if the CMHC knew about it and his department knew about it, then why did they wait so long to tell him?
Mr. Ernst: Inherently, there is nothing illegal about selling a property for a particular price where one party is selling it to another party at a different price. It may not be terribly ethical, but it is not illegal. So that if somebody is doing this--I mean, it is a caveat emptor situation in the public. If somebody sells their property for $10,000 and the person who buys it turns around and sells it for $20,000 at a later time, then there is nothing untoward about that other than the fact that either somebody paid too much or somebody sold for too little.
So that whether these kinds of activities are a good way--there are all kinds of scams going on in the public on a regular basis, and we try and keep an eye on as many of those as possible. If they are in contravention of The Consumer Protection Act or in contravention of The Business Practices Act, then we come down on them quite hard. We have had some significant successes in recent time. Nonetheless, if the concern is simply that are we collecting the appropriate amount of tax, I would say from what I understand, by and large yes, we are.
There may be occasions when for one reason or another it does not occur, but, nonetheless, what is the true value of the property? I mean, on the one hand if you sell a property for $10,000, is that the value? If somebody else pays $20,000 for it, is that the value or is the value somewhere in between or above or below those amounts? It is a subjective situation as to whether or not that is the particular value.
I have indicated what the process is in terms of the Land Titles Office and how they deal with that. But by and large, again, Mr. Chairman, there is nothing inherently illegal about it.
Mr. Maloway: Mr. Chairman, I think that the police that are currently interviewing and investigating the whole disaster have a different opinion of that. I asked the minister before about a house on Scotland Avenue--that it increased from $21,000 to $65,000 in one day, and I just wonder if there is a way to set up some sort of a mechanism to screen extremes? You know, I understand some of these house-flips involve three or four weeks, and it is quite possible that if the operator bought it for 40 and sold it for 60, and there is a three-week period in between that maybe he did fix it up--and, in fact, there are people in the business who do that. But a house that same day flips, which was quite characteristic of this ring, going from $21,000 to $65,000, I just wonder if there is a mechanism that can be set up to flag something like that.
Mr. Ernst: I think I indicated, Mr. Chairman, that in a case like that if two transfers came in together that the tax would be applied on the higher amount, the land transfer tax. But whether or not that is illegal or not--unless there is some fraud or other kind of activity that is associated with that--if it is decided between two parties that is what they want to do, then there is nothing illegal about that, and why would we want to track it?
Mr. Maloway: So, yes, there would be no desire on the department's part to ask questions or to refer it for an opinion.
Mr. Ernst: Mr. Chairman, the job of the Land Titles Office is to register titles of land to ensure if people have a valid ownership instrument or a mortgage or some other caveat or whatever on their particular property. That is their function. Their function is to provide that service to the public.
Mr. Maloway: Mr. Chairman, and I do understand the minister's point in this. It just seems to me that--I have actually personally visited with most of these people. I think that if any of you had been in the same situation to see young newly married couples, just starting out for the first time, with just more or less minimum-wage jobs being involved in a proposition like this, where the property is overvalued by $30,000-$40,000, it is not a laughing matter, and I feel sorry for those people. They are all over the city. In my view, the sooner the ring is shut down the happier I will be. I guess there is a role for people who fix up houses and sell them and so on, but this particular operation had certain characteristics to it and a certain method of operation that should have maybe been caught earlier than it was, and I guess that is what we are getting on to. The question is, have we learned anything by this?
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Now, I want to ask the minister about the appraisal business, because it seemed to me that the common thread in all of this was that the appraisal was not made available to all the parties involved, that the appraisal people have some sort of a rule that indicates that when you buy a house and an appraisal is done, that is for the bank's purposes only, for example. Then if you resell the house you have to get another appraisal, and I guess it is good for the appraisal business. It means that people have to have more appraisals.
But my point is that if the bank could have shared the appraisals with these people then this thing would have been nipped in the bud, because these people tended to deal with one real estate agent and they were certainly not sophisticated. None of them were multiple-time house buyers and, because of that appraisal business, it seemed to me that if we could somehow make sort of regulations or make some agreement with the appraisal institute that they would permit appraisals that they do on a house to be shared, then that would solve a tremendous amount. In this particular case I believe this ring could not have operated if that had been in place, and the minister knows a bit about this area.
Mr. Ernst: That is right. As a former real estate appraiser I can tell you that first of all, generally speaking, in the business, the report is the property of the person who paid for it. But I suspect that what the member is alleging is that a report provided to a financial institution for the purposes of securing financing, if that were to be shared with the owner that they might not have proceeded with it. I am assuming that if the appraiser report was accurate that they would not have got their financing if the property was in fact overvalued. Likely speaking, if a property was worth $25,000 and was sold for $65,000 or an offer to purchase was concluded at that that they would not get the financing if the bank got a report that said the property was worth $25,000. The bank or financial institution would have queried that immediately, I would think.
Nonetheless, the warning we give from the consumer side of things, generally speaking, to people is, before they buy anything check out the person you are buying it from and, if it is a case of a piece of real estate, for instance, there is nothing preventing somebody from hiring a real estate appraiser on their own. I mean, very often you see in offers to purchase that it is subject to the inspection of the property by an engineer. People should, quite frankly, making an investment of that size--that is clearly for most people the biggest single investment they will ever make, the biggest single commitment they will ever attach themselves to in terms of a mortgage, and it is, I would think, in their best interest to hire somebody professional to give them an indication of what the property is worth generally in the open market.
I would not certainly do it but, mind you, having been in that field of endeavour I am maybe a little prejudiced but, nonetheless, anybody making an investment of that size--and today, I mean, the average is somewhere up around $90,000 or more now, I believe. That is an incredible amount of money, and people ought to--I mean, to invest $100 or $200 to hire a real estate appraiser, a qualified, independent appraiser, makes ultimate sense in my view but, historically, that is not done.
You might also try and differentiate between the fact that reports provided by a professional real estate appraiser may well be significantly different than those provided by a real estate agent, who is not bound by the same code of ethics that a member of the Appraisal Institute of Canada would be, so those may vary from time to time. Even reports from qualified appraisers, depending upon the assumptions that are made in terms of a value, can differ significantly, one from the other.
In theory, if you apply all of the principles for the establishment of values laid out in the course material in the Appraisal Institute of Canada, you should all come to the same conclusion, but from time to time somebody looks at something and sees more value or less value in that particular circumstance that another may not.
Mr. Maloway: I would like to ask the minister then, who called in the police? If the minister did not know until November 7, when the press ran their article in the paper, if he did not know about it till then, this thing had been going on for a year and a half and more before that, then who called in the police?
Mr. Ernst: I have no idea. Presumably, one of the injured parties may have called the police in, but, as far as I know, it was not us.
Mr. Maloway: Then the question is, why did you not?
Mr. Ernst: From the perspective of the Land Titles Office, there was no evidence of any fraud. There was no evidence of anything illegal. If there is no evidence of anything illegal, why would you call in the police?
Mr. Maloway: Mr. Chairman, the point is that at some point you did. At some point, your investigators turned over to Commercial Crime the information.
Mr. Ernst: Mr. Chairman, let me consult with the Consumers' Bureau people that are here and see what was involved there, so hang on.
Mr. Chairman, staff from the Consumers' Bureau also were not involved in this, but it may have been the Securities Commission where a complaint was lodged with the registrar of The Real Estate Brokers Act. I do not have that staff here, so I will have to ask whether it was they who were involved.
Mr. Maloway: What we have, at least if you read the August '94 CMHC newsletter, clearly this thing was well underway by August of '94, presumably the beginnings of it. They were aware some time before August '94, and yet the minister was not aware until November of 1995. This thing had been operating under the minister's nose for a year and a half, and his department has been aware of it. We were able to determine that they were involved in it fairly early because somebody went to them.
The question is, because it got so big, I mean, why would they not tell him? I do not understand that.
Mr. Ernst: Again, we have to determine whether anybody has done anything illegally. You may not like what has happened, and the people may feel they have been ripped off and so on, but was there anything illegal done? That is a matter of determination, I guess, ultimately, by the police department, but the fact of the matter is that simply the buying and selling of property is not illegal.
The buying and selling of property for different sums of money is not illegal. Registering those titles is not illegal. The financing of the property is not illegal. Now, if there is fraud involved somewhere along the way, that is a different question. If there are unethical or illegal practises by a real estate agent, for which they should have their licence suspended, that is a different situation. The fact of the matter is that because somebody sells a property to somebody else for more than it is worth, it is not illegal.
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Mr. Maloway: But if the minister were to check his records, I think he would find that this whole thing started to become unglued when the first person, the first man, an 18-year-old, who worked at a convenience store, went to the Securities Commission because he had been able to buy three properties in one day, obtained three mortgages with three different branches of the CIBC, using the same mortgage broker. I believe one of the houses was put in the name of his brother. Now that is the story that this person walked into the Securities Commission with, and the minister is asking, we are looking for something more than just a straight same-day flip of a property. We want to see some evidence of improprieties.
Now, if that sort of a story does not alert some red flags, then I do not what would, and it did. It was that story that got the whole ball rolling, and then No. 2 came in and No. 3 and No. 4. Then your investigator started chasing Nos. 5, 6, 7 and 8, and the stories started to unravel. But this was early on in 1994.
Mr. Ernst: I should point out that the Manitoba Securities Commission also, as does the PUB, operates on an arm's-length basis from the government, and they are responsible for the administration of The Real Estate Brokers Act. But I will inquire as to the circumstances and what we have with respect to the commission, and we will provide some additional information to the member.
Mr. Maloway: My information is, and I think I am right, that the CMHC is in fact the client of the RCMP in this situation, so it does not sound as though the provincial government has any role in this investigation at all at this point. The fact of the matter is that the principles in this operation are still operating. That is the sad part. From early June '94 until the minister read this story in the paper on November 7, 1995, this ring continued to flip houses and take advantages of these poor people. They continue to do it.
(Mr. Mervin Tweed, Acting Chairperson, in the Chair)
It was not until the first two people came to me and we took the story to the paper and we did a story on it, that is when things started to happen. That is when the rings started to put up “For Sale” signs at their houses, and that is when they started to run for cover. That is when the minister says he first read about it: You know, I just came home and opened up the paper and there it was. And so, you know, who shut down the ring? I mean, obviously those newspaper stories did more than all these investigative teams that have been running around for a long time trying to settle this thing down. I know there is an element of due process here, but surely the department is here to protect the consumers, and I do not know why it would take two years before the industry and before the government could get on top of this thing and shut this operation down, and I do not even have a guarantee that it is shut down right now. I wish somebody would tell me that it is.
Mr. Ernst: Okay, I have been provided with a little bit of information. Maybe I can impart that to the member for Elmwood (Mr. Maloway). In October of 1994, what was indeed the Manitoba Securities Commission received a complaint alleging a certain real estate agent may have been involved with another individual in a scheme to defraud CMHC and the income tax department, neither of which are provincial government agencies. However, the commission did do some preliminary investigation and indicated that a certain real estate investor had purchased some lower priced houses and flipped them and that this real estate agent had been involved in all of the transactions.
The buyers, I gather, purchased the houses with little or no down payment by misrepresenting their financial position and the financing terms of the deals to the mortgage lender. The initial inquiries also showed that there may have been two lawyers and a bank loan officer who were also involved in this particular scheme.
So on January of 1995 the findings were reported to the commission and the commission directed that the matter be discussed with CMHC, who is the defrauded party in this case, with a view to filing a criminal complaint. CMHC did file the complaint, as they were the injured party in this case, with the RCMP in the fall of '95. Securities Commission staff contacted the real estate agent and obtained written undertakings that that real estate agent would cease and desist from all further dealings with the investor.
An Honourable Member: When was that?
Mr. Ernst: It does not say, particularly, but some time after that I guess. It said, when CMHC learned that--when the commission learned that CMHC had filed a complaint in the fall of 1995, that they had in fact done that. Currently the RCMP and the Law Society are both conducting investigations. The real estate person involved has had his registration suspended, and I am advised he is on some extended sick leave, for whatever. I do not know what the circumstances are.
The commission's investigation has been put on hold pending the report of the Law Society and the RCMP with respect to the operations of the alleged investor who was doing this, Tysowsky [phonetic] I think is his name--
An Honourable Member: Leonard.
Mr. Ernst: --indicated that none of the individuals involved in this circumstance, save for the real estate agent perhaps, and that is yet to be proven, fall under the jurisdiction of the Manitoba Securities Commission. CMHC is the defrauded party and if the bank has an employee who was not doing what he should be doing or doing something untoward, that is another matter. But the bank is the injured party there, and we do not control what the bank does, we do not control what CMHC does. So the RCMP are involved, they are investigating. If there is wrongdoing with respect to certain activities there, then the RCMP will lay charges.
Mr. Maloway: I would ask the minister if it is possible to provide me with a copy of the briefing note that he read from, because actually that is probably the first bit of real information I have been able to get on this whole case. It would indicate to me that at least the minister seems to have been doing something anyway. I was not aware that the real estate agent had been, in fact, disciplined. As a matter of fact, quite the opposite. I had spoken to the real estate association and the argument there was, well, we cannot do anything about it because we are waiting for the criminal side of this to sort itself out.
My response was, well, when will this happen? I mean, it could take forever. It has already taken forever. You have to understand here that these people are in foreclosure. I just talked to one a couple of weeks ago and his lawyer has been telling him to keep paying the mortgage payments, but he cannot do it anymore. He has just had his second baby and it is only three weeks old or whatever and he has another small child and he is walking out of his house, and that is the sad part of this whole thing. If we could have speeded this up and got this over with quicker, then people might have some remedies, but while all this process is going on these people are suffering and they are going to be out on the street. Would the minister provide me with a copy of that briefing note?
Mr. Ernst: I will provide the member with a summary.
Mr. Maloway: Clearly the minister is saving some information for a potential future question. I would like to ask a couple of questions about what the department and the minister has learned from all of this, because surely there are some rules and some changes that could be put into place that might help out in the future.
A lot of this was fairly straightforward, but the whole role of the appraisers was really the cloudy part here. It was hard to tie that down to get information about it. Now does the minister have any recommendations? Will the minister have any recommendations coming out of this that he can adopt with respect to any area of his department that was involved in this?
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Mr. Ernst: There is legislation in place to deal with people like this. It is called the Criminal Code of Canada. If you are doing something illegal and found out and charged and proven in court that you are guilty, then you will pay the price. That legislation is there for people who do not follow the rules, but as I said earlier it is not illegal to sell property, buy property at any particular price. It is illegal to defraud people, it is illegal to do some other things, but the fact of the matter is that we have laws, we have people to enforce those laws, and the appropriate parties are involved in this particular case. While it may not occur as quickly--and I have sympathy for the folks that got involved in this in the first place. Relatively unsophisticated home buyers, but the fact of the matter is there are unscrupulous people in this world, and they do operate out there in a variety of different fields.
All I can do is encourage people. We do have consumer advocates out there, the Consumers' Association. We do run volunteer programs. We have speakers' bureaus to go out and tell people what they should do before they buy anything to ensure that they protect themselves as much as possible and do not get duped in the process. Beyond that, I do not foresee that we need to necessarily do anything beyond enforcement of the Criminal Code because it is criminal activity that is illegal.
(Mr. Deputy Chairperson in the Chair)
Mr. Maloway: There was a recent press report about a million-dollar scam here involving stolen cars and merchandise and so on and calling it Winnipeg's largest scam, but would the minister agree that this one involves even more money? Does the minister have a figure as to what amount of losses would be involved here?
Mr. Ernst: I presume the member is talking about where the people came in, set up a company, leased a bunch of cars and then took them offshore or something like that. Is that one he is referring to?
Mr. Maloway: No, I was simply making the comment that that particular scam was around the million-dollar range, and it was called the largest in the province. I am pointing out to the minister that this one is clearly multiples of the million dollars. Does the minister have an idea of what this is going to cost at the end of the day? How much money has been lost by the banks and CMHC at the end of the day?
Mr. Ernst: No, I do not, Mr. Chairman, but again this is a matter of fraud. Fraud is a Criminal Code offence and it is under the Criminal Code the people are prosecuted. I do not have any idea, nor does our department have any direct involvement.
Mr. Maloway: Has the minister made any representations or recommendations to CMHC in an effort to tighten up some of its procedures? Because clearly, the fact that the CMHC did not inspect these houses is in large part a large contributory factor to this scheme being successful.
Mr. Ernst: The Canada Mortgage and Housing Corporation, as it is now called, is a federal government agency. They are big boys, they have been in this business a long time, and if they choose not to inspect houses as a conscious policy decision, which it is, an attempt to try and save money in their operations, then they open themselves to this kind of abuse. Again, illegal activity is illegal activity and prosecutable under the Criminal Code.
Mr. Maloway: So the minister is telling me that no representations have been made by his officials to CMHC to tighten up their standards? He is just assuming that they will figure it out on their own.
Mr. Ernst: As I said, Mr. Chairman, Canada Mortgage and Housing Corporation is a federal government agency.
Mr. Maloway: And a federal government agency that would not look kindly, I gather, on representations from a minister in a provincial jurisdiction.
Mr. Ernst: The member can surmise as he wishes.
Mr. Maloway: Is the minister aware of any other rings operating within the city at this point in time?
Mr. Ernst: No.
Mr. Maloway: Is the minister aware of any other rings operating in the province of Manitoba at this time?
Mr. Ernst: I am not personally aware. There may be something at the Manitoba Securities Commission, some complaint may have been laid or something; that I do not know.
Mr. Maloway: Could the minister then endeavour to find out about that and get back to me as to whether there are other rings operating in the city or in other areas of the province?
Mr. Ernst: I do not know any. I will ask the Securities Commission if they have had any complaints and what they are doing about them, but I cannot suggest for a minute that there may be a ring involved, there may be a conspiracy involved. All I can ask is do they have any complaints from the public with respect to certain activity, and then we will take it from there.
Mr. Maloway: Is the minister aware of other similar type rings operating in other cities?
Mr. Ernst: Outside of Manitoba?
Mr. Maloway: Yes. The similar type of rings have been discovered in other parts of the country. I just wanted to ask the minister whether he was aware that these rings were operating elsewhere.
Mr. Ernst: No.
Mr. Maloway: I wanted to ask the minister some questions on the Automobile Injury Compensation Appeals Commission. Can he give us an update as to what experience his department has had with this particular Automobile Injury Compensation Appeals Commission over the past year? I believe last year he told me that appeals, while they were almost negligible the first year, the second year they increased a little bit, but the department did not have to expend the money that it put in the account, I believe, for offices and stuff like that. So I would like him to give me as complete as possible an update on what has been transpiring over the last 12 months.
Mr. Ernst: Fiscal '95-96, there were 37 appeals dealt with by the commission. For '96-97 the commission expects somewhere around 100 appeals, and the expectation is, generally on an average after that, about 200 appeals are expected to be filed. We based it initially on the fact that Quebec with a similar system has about 1,600 appeals per year, and if you take it on a per capita basis, we expected to have 250, 300, something like that.
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We are not sure why the number of appeals has not reached that level yet, except that it may take a considerable amount of time to work its way through the system, although, you know, the other surmise might be that it is working well and you do not need to appeal, that Autopac is paying an appropriate amount of money, but I mean, that is a guess on anybody's part at this point. We will see how the experience over the next year or so goes. But again, we have not staffed up to the full amount. We have operated at less money than was originally budgeted.
Mr. Maloway: Is the minister aware or has the minister been approached by any insurance companies in town inquiring about information on the no-fault system and how the appeal procedure works and the number of appeals and so on, with the view to making a representation to the government regarding the privatization of the no-fault benefits program?
Mr. Ernst: No.
Mr. Maloway: So the minister is not aware nor has he been represented to in any way by any life insurer in town regarding the takeover of the MPIC no-fault benefits program?
Mr. Ernst: That is correct.
Mr. Maloway: Would the minister vigorously oppose any representations that might be made to him regarding such a proposal?
Mr. Ernst: That is a hypothetical question, Mr. Chairman, and I do not intend to answer it.
Mr. Maloway: I would like to ask the member some questions regarding the Manitoba Securities Commission. There is some talk about the securities commission amalgamating in this country. It has been going on for a few years now with the federal securities commission. I guess there is some merit to it, but Manitoba has resisted it.
I would like to ask the minister to give us an update as to what is currently happening with that proposal.
Mr. Ernst: In 1994, there was a potential memorandum of understanding or letter circulated by the federal government with respect to a national securities commission to which to the best of my knowledge all provinces declined. However, the Province of Ontario and the federal government have been conducting bilateral negotiations over the past few months with respect to the potential for a national securities commission.
When that was learned, some articles appeared in the Globe and Mail and so on, and information came to us through our own securities administrators who meet together fairly regularly and discuss things amongst one another. We inquired from Ontario, and we found out that they were having bilateral negotiations on the basis of a national securities commission, one at least, because 90 percent of the securities activity takes places in Ontario anyway. The Ontario bilateral discussions, as I said, we learned about. We had some discussions with their staff and our staff, and there have been a couple of other meetings with respect to the issue, but I suspect there will be some further discussions on that issue again at the Western Premiers' Conference next week and at the First Ministers' Conference later in June.
Our position in 1994 was we were not interested. If the rest of the country is going to form a national securities commission and leave Manitoba sitting by itself, that may not be in our best interest either, but if we are to be involved in anything, we have a certain quid pro quo we require and would not be interested without those conditions being met.
So the process is ongoing. Discussions will be taking place, and we will see how it goes.
Mr. Maloway: Then I take it from that that the minister is currently resisting all changes to this proposal, and he is going to keep resisting until the Premier (Mr. Filmon) tells him he has made some other arrangements.
Mr. Ernst: That kind of speculation does not deserve an answer.
Mr. Maloway: Well, I do not want the minister to get testy about this. I mean, the fact of the matter is he has done, I am sure, a very good job of representing Manitoba's interests, to make certain that we do not lose anything in this attempted squeeze, and I am sure he is doing a good job at it. What he has said was, I thought, that he was trying to maintain the status quo, but there may come a time when he might be forced to make a trade-off, and that is what I read into what he had to say.
Now if he did not say that, then would he please tell me again what he did say or what he did mean.
Mr. Ernst: What I said was that we had rejected the 1994 proposal. If it turns out that a national securities commission is going to be into place and Manitoba is the only province not included, that may not be in the best interests of Manitoba ultimately. If that is the case, then we might consider the national securities commission proposal, provided that our conditions, the minimum conditions, are met. That is what is ongoing at the present time.
Sorry, if the member misunderstood what I said, but we have not rejected anything, nor have we endorsed anything at this point. What we are looking at is a set of conditions that are precedent to Manitoba becoming involved in anything beyond what we are doing now. We have certain desires and certain protections we want in place for our industry here, for the growth of our province, for the ability of our commodities exchange and stock exchange to function, to provide opportunities for the generation of capital through raising of money through securities, and we have a lot of conditions that would be precedent to our becoming involved. Be that as it may, nothing has gone that far yet.
Mr. Maloway: Would the minister foresee job losses then? I assume that is part of the motivation for not wanting to integrate.
Mr. Ernst: If you are talking about job losses within the commission itself, one of the conditions precedent is an office here in Manitoba, a full-service office--[interjection] Well, whether it is bigger or smaller than the current number of people, again, we are not talking about a lot of people in any event. The Securities Commission have maybe six or eight, 10 people who work there; I am not sure exactly how many. The fact of the matter is, it is the function more than the individual circumstances there that is more important, because that relates to a whole lot more jobs than the actual commission itself. If we have newly forming companies or companies that are presently venture capital financed who want to go public once established, they cannot get into a marketplace at a reasonable price, then that impacts on an awful lot more jobs than the direct jobs in the Securities Commission, and that concerns us greatly. That is something we are very much looking at.
Mr. Maloway: One of the ideas that I have heard advanced in the past has been the idea that the Securities Commission should vet the Grow Bond applications. I would like to ask the minister, what is his opinion or what is his staff's opinion of the feasibility of something like that? What would be the advantages if there are any?
Mr. Ernst: I do not know that there is any specific advantage. The legislation excludes it. They are excluded from the jurisdiction of the Securities Commission. I think they have their own board, so whether that board has any better expertise or less expertise than the Manitoba Securities Commission, who knows? The fact of the matter is, they are governed by a board but legislatively outside the Manitoba Securities Commission.
Mr. Maloway: Would the minister look into that question and maybe get back to me with an informed opinion as to what the possibilities are? If we had a better procedure by putting them under the Securities Commission, I think the public might be better served by that. On the other hand, if they are operating fine the way they are, then there probably is no sense changing it.
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Mr. Ernst: I think I gave him that opinion. Quite frankly, things are generally operating okay the way they are with respect to the Grow Bonds board. I do not see any need to duplicate any efforts; we have enough of that going on. We are trying to get rid of duplication, not add to it.
Mr. Maloway: Mr. Chairman, the minister will recall that I spoke with him in the last month about the question of the Lloyds names, and I wondered if he could take some time or have staff investigate that question. I understand that the Lloyds names in the United States are able to get a much larger settlement. I did have the figures. I do not have them here with me right now, but they more or less got triple what they were offered two years ago. They are still going to be out a lot of money, of course, but at the end of the day, they were able to do this by having the backing of Securities Commission regulations and laws in the United States. There are at least two jurisdictions in the United States--the minister can pull it up on the World Wide Web there; it is all there to be seen--but there are at least two states that have enacted some sort of legislation to protect these names.
The comment that was made, that I had read anyway, was that the reason the Canadian names were not being protected is because they lacked this similar sort of tough securities legislation. I am not certain that we can do anything about it or the government can do anything about it, but if the government is interested, maybe they could look into it. We would be happy to give you the information as to where we found the American legislation.
Mr. Ernst: Well, Mr. Chairman, I do recall the member talking to me about it. The member at that time promised to give me the information that he had, and he did not do it; but if he does, I will.
Mr. Maloway: Mr. Chairman, I must have been having a busy day because I do not remember promising to give him the information, but I am not saying he is wrong; I may have, so I will now have to remember to do it.
I would like to ask--I guess it would not be a fitting conclusion to Estimates that we did not get into some sort of discussion here about the lemon law, and as long as I have been here we have been discussing it. Actually, we were in government and Gerry Ducharme was the critic. Give him credit, he was actually the first person to be talking about CAMVAP, I guess you refer to it now, but, of course, his approach was not as tough as ours would be. We tended to support the tough legislation that was implemented in California and other states, and, in fact, you know, 45 of the 50 states do have lemon law, but some of those states have essentially company lemon law. It is really just a farce. It is not very effective, and the opinion that I had from the Ph.D. of lemon law himself in Florida, where I attended some of the actual sessions where they make decisions, he felt that the--[interjection] My colleague the member for Radisson (Ms. Cerilli) said she did not know I had been to Florida, so now I am in big trouble.
Mr. Chairman, the fact of the matter is that there certainly were states where their lemon law is functioning very, very well. Their opinion of the Canadian system, which is the system that this government signed into last year, was that this is a kind of watered-down version. It is better than no lemon law, but it is a watered-down version. I would like to ask the minister to give us an update of where we sit with this? How many people have filed for arbitration, and what have been the results of each of these arbitration panels?
Mr. Ernst: I would be happy to provide that information to the member, but I can tell you that if you have two willing parties prepared to deal with something, then I think that is much better than trying to force them into court by virtue of legislation. That was the premise upon which CAMVAP was originally founded. It was supported by all of the parties, including the Consumers' Association of Canada. In fact, they sat at the table with the announcement, quite frankly, ready to endorse it.
But I can tell you that in Manitoba for the last year, there were: 20 arbitrations; nine mediations; total consent awards was two, where they reached a settlement and the arbitrator awarded that settlement; eight, there was no liability on the part of the manufacturer; 12 were determined to be in favour of the consumer, involving four buybacks, one replacement; six had ordered repairs; three were reimbursed for repairs; and one was provided out-of-pocket expenses. Regarding the nine mediations, settlement occurs, generally speaking, before arbitration, and the consumer withdraws. But those are the numbers, basically. In Canada, as a whole, in '95 there were 365 arbitrations, 92 mediations, 29 consent awards, 58 buybacks, seven replacements, 127 ordered repairs, 68 reimbursed for repairs, 22 with out-of-pocket expenses and 138 where there was no manufacturer's liability.
Mr. Maloway: I would like to ask the minister whether he would provide us a copy of the briefing note that he has just read from, because I am trying to get an idea as to whether the companies are winning or the consumers are winning, and I would imagine that statistically over a number of cases it probably would be 50-50, but I do not know for sure. One figure the minister gave indicated that the consumers had won in 12 cases, and I guess the point, Mr. Chairman, is this, that in some of the states where the lemon law is a sham, the company wins all the time. In some of the other states, it is more balanced between the consumer and the company, and that is what we want to see.
Mr. Ernst: In this case, in Manitoba, 12 out of 20 were awarded to the consumer.
Mr. Maloway: Another element to this program that I have noticed is it is virtually invisible. In fact, if a person buys a new vehicle, there is absolutely no mention of the program to the person. There is no booklet provided. In Florida, it is the law that the lemon law book must be provided to the new buyer. It must be, I believe, explained to the new buyer. You cannot sell a new car in Florida without the book. In Manitoba, I would invite any of you to go out and buy a new car, and you will find that the salesperson will not know anything about this program. It is the sad truth, but are there no provisions? What sort of provisions are there in place for the sales staff who deal with the customer to explain that this program exists? It has never been explained.
Mr. Ernst: Information booklets are available at dealerships, the Better Business Bureau, the Consumers' Bureau, the Manitoba Motor League and the Consumers' Association of Canada. Owners' manuals for new cars include a reference to the plan, as well as a toll-free phone number. We are attempting to get into the small claims court system information pamphlets, as well, but I think there is a significant move on the part of the auto makers to make the program available and noticed to the public. If they are putting them in new car manuals with a toll-free phone number, that is a pretty significant move on their part.
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Mr. Maloway: Is the minister saying then that they are planning to do this, or they are doing it, and if they are doing it, are they doing it across the country or just in certain provinces?
Mr. Ernst: The information that I have been provided with is that they are doing it now.
Mr. Maloway: Well, when did they start doing it?
Mr. Ernst: I am not aware, Mr. Chairman, exactly the dates or whether they have all got them in or only some of them have them in at the moment, but we can inquire.
Mr. Maloway: Can then the minister endeavour to provide me with a copy of material that each manufacturer produces--at least the big three North American manufacturers--that is supposed to be given to the consumers? I am not aware of anything that is being given to anybody at this point, and this program has been in now for what?--a year and a half, two years.
The other point that I would like to make here is, is there not a statistical manual or book put together on the experience of the program that can be made available to the Legislature? For example, in Florida, the Florida program at the end of the year produces a report, and the report--I can provide a copy to the minister if he wants--is quite detailed. It is a year-by-year analysis of how the program operates. So at least you have some idea of where you started from and where you have gone over the course of a year. No such thing exists here.
Mr. Ernst: As far as the information is concerned, I will make inquiries to see what is available; and whatever we can get our hands on, we will pass along to the member.
With respect to the annual report, the 1994 report, which is only part-year, I think, is available. We could provide you with a copy of that, but the '95 report is expected in the next few months.
Mr. Maloway: Before I turn the microphone over to my colleague the member for Radisson (Ms. Cerilli) to ask some questions, I would like to conclude by asking the minister to give us an update on the activities under The Business Practices Act, as to how that whole program is working. It has been now what?--three years maybe. Oh, gosh, more than that.
Mr. Ernst: It is working great. We have had some very good successes, and they have been advertised in the newspaper. Gordon MacDonald here, the investigator with the department, is a television star. We are quite happy with the way things have been working.
Ms. Marianne Cerilli (Radisson): I actually thought I was coming in here to do Sport, but we will do that another time, I think.
I just want to ask a few questions related to the Residential Tenancies Branch.
Mr. Ernst: Has the member for Elmwood (Mr. Maloway) completed his--I have a whole bunch of staff sitting here and there is no point to them sitting here if we are done.
Mr. Maloway: I would like a more complete answer on the unfair--Business Practices Act, if he could, and then, fine, we are finished.
Mr. Ernst: I think what I said, we handled 770 complaints in the last year. We have had some very good successes. As a matter of fact, our legislation is better than the Criminal Code in many cases, and we have been able to stop several significant illegal activities in conjunction with the Winnipeg Police Services. As a matter of fact, the Winnipeg Police Services and our investigators worked together very well and have had some very good success.
If we have a second, I can relate a little story to you. There were--I think it is Agape--ministries were out raising money on the basis that if you contributed to your salvation, you would get an interest-free mortgage and a few other things. People were quite easily taken in by this. I guess it was Gordon who went to the meeting--I mean, there was no advertising for this; this was all done clandestinely, word of mouth. Anyway, we did find out about it, so Gordon and the Winnipeg Police department went down to the meeting to hear what was going on and, of course, what they heard was illegal. So what happened was at the end of the meeting the guy asked, are there any questions? The police officer stood up and said, yes, Constable So-and-so, Winnipeg Police department, you are under arrest.
So that was through actually the work on our staff that were able to get the information which then the police were able to act on, so now we are quite pleased to say that there are 700-and-plus situations that we have been able to deal with. As a matter of fact, we had a loan broker business we shut down in a matter of less than three weeks, I think, and we were quite proud of the fact that the staff were right on it and dealt with it immediately.
Mr. Deputy Chairperson: Would the committee like to go through some of the sections up until the Residential Tenancies? What is the will of the committee?
Ms. Cerilli: I appreciate the indulgence of the committee in accommodating the way that we split our critic areas. I just have a few specific questions related to policy, some concerns that have been brought to my attention with regard to residential tenancies complaints. I wonder if the minister could tell me what the policy is with respect to landlords charging rent increases for repairs that were mandated or required because properties were not up to standard. This has been brought to my attention that it has occurred. It seems to me that if there are requirements for landlords to do repairs because properties are unsafe or unsound that those should not be turned around as capital improvements on the properties that would qualify for a rent increase.
Mr. Ernst: I can tell you that generally speaking when an order is issued and work has to be done, we first of all ensure it is done, but we have the right to disallow it under a certain set of circumstances. Capital improvements, in the general scheme of things, like capital improvements to buildings or major replacements and things of that nature, maintenance, are all taken into consideration in the application of the rent process.
Ms. Cerilli: I am not clear, though. Is it legal or is it policy that an improvement that is done as a requirement of a work order can be then turned around and paid for by the tenant with a rent increase?
Mr. Ernst: I guess the answer is yes and no. It can be taken into account and it can also be disallowed when the rent increase application comes forward. If the rent increase application came forward to which was attached an order or where an order was forced upon a landlord, it is taken into consideration at the time of the rent increase by the department.
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Ms. Cerilli: I am wondering if the minister could give an example of one that has been allowed, if with the assistance of the staff, we could have some examples of when it is deemed admissible that work order repairs would qualify for a rent increase.
Mr. Ernst: We do not have an example just at the present time, but what I can undertake is to have them look and see if there is something available that might be pertinent, and if the member has a specific example she wants us to look into, then by all means, provide us with the information, not necessarily on the public record but provide us with the information, and we would be happy to look into it.
Ms. Cerilli: I can endeavour to dig that out. I am also concerned that there is a policy that is perhaps not being followed in the Residential Tenancies Commission. As I understood it, the commission was designed so that lawyers would not be used by either party in a dispute over rent. It is my understanding that often landlords, particularly if they are with a larger property company, will use lawyers in the hearings.
I am wondering if that is acceptable, given the policy, and if it is not in the opinion of the government setting up a real disadvantage for tenants who likely will not be able to hire counsel. If this is happening, how often is it happening, if it is not a violation of the intent of the Residential Tenancies Commission and division?
Mr. Ernst: There is no prohibition policy or legislatively for anyone to have representation, be it a lawyer or some other person. It is discouraged, generally speaking, at the preliminary or the first level of decision which is at the branch level. Very seldom do lawyers ever get involved there.
However, at the commission level which is a little more formal with commissioners hearing and so on, it is not uncommon but not common to have both landlords and tenants represented by lawyers there. There is no necessity. We try to maintain the procedures, and the commission tries to maintain its procedures so that no one requires a lawyer, but, sometimes, particularly if they are not happy with the original decision of the branch, they may feel that they need the services of an advocate to appear before the commission when the appeal is heard, but there is no prohibition.
Ms. Cerilli: So how does the Residential Tenancies Commission deal with this when it occurs, when there is a lawyer with the landlord or the building managers and there is no counsel for the tenant? How is that dealt with by the commission?
Mr. Ernst: First of all, the commission has a set of practices and procedures. Let us assume for a moment it is a tenant unrepresented, has an opportunity to understand the process, the fact that documents have to be filed in advance, the fact that they are available for the tenant to review in order to acquaint themselves with the information. I have never been to a commission hearing, but I am told that the commission, by and large, tries to not allow anyone to dominate the process. It is a fairly informal process; it is not nearly like a courtroom, and commissioners will, from time to time, try and encourage information to come forward that maybe we thought of, or whatever. They try to be fair and reasonable, I guess, to both sides, is where it is at. If it is a case where an advocate happens to be there on behalf of one of the parties and just trying to dominate the circumstances, then they tend to try and not allow that to happen or discourage it as much as possible.
Ms. Cerilli: Maybe to conclude this area, I just would like to suggest that the minister give this some attention because I have gone to the commission with tenants who have been very intimidated by the use of lawyers and by the way the proceedings do not follow what they were told would happen. There is a prescribed speaking order, and then there are supposed to be no interruptions. What ends up happening is, it seems that that is not what occurs. The tenants are intimidated, and they are interrupted. They feel like it is not always an equal or fair hearing. I am sure the minister can imagine, especially with some tenants who would not be able to deal with an issue like that from a broad base of experience with having to advocate on their own behalf and be faced with trying to counter a lawyer working on behalf of the management of a block--
Mr. Ernst: Some of the lawyers are not so great either.
Ms. Cerilli: The minister says some of the lawyers are not so great, but I am just drawing this to the minister's attention, that I have had tenants come to me with complaints, and I would just request that he give this some attention and ensure that the staff and the commission are following the protocol and the procedure that is prescribed.
Mr. Ernst: I thank the member and certainly will take that information back to the commission. Sometimes, though, in an attempt to be flexible, they are not following procedures because they are trying to be flexible, but that is construed by some as not following the procedures that they had sort of expected. In particular, if you have some specific instance that you would like us to investigate, we would be more than happy to do that.
Ms. Cerilli: I will raise another issue, and this I have drawn to the minister's attention, both Minister of Housing (Mr. Reimer) and the minister of residential tenancies.
I want to ask about the use of the police to issue eviction notices. How common a practice is that? The case that I am referring to occurred with public housing development. The tenant was responding to a knock on the door, and there was the manager of the block with a policeman to issue an eviction notice. I am wondering what the circumstances have to be for that to occur and, again, looking at it from the point of view of the tenant, the intimidation that occurs, and, well, it just seems that there was undue force used.
Mr. Ernst: I ask for clarification of the member: Is this a landlord appearing at the door to deliver an eviction notice accompanied by a police officer, or is this the police officer delivering the notice?
Ms. Cerilli: That is a fine distinction. I think it was the landlord or the manager of the building delivering a notice accompanied by a police officer, but I am not sure. Maybe the minister can clarify the distinction for us.
Mr. Ernst: This is a civil matter, and in a civil matter the police department ought not to be delivering anything. If it is a case where a landlord in attempting to evict a tenant has some fear for his physical safety or something along that line and has requested the police to attend, that is a matter between the person and police department, but it has nothing to do with us. However, if it is a circumstance where the police department is involved in a civil matter, which I doubt very much, they are usually so busy that they do not have time for half the things that they should be doing, let along delivering notices; but, if we found that out, we would certainly be very unhappy about that and would take it up with the police department immediately.
* (1720)
If it is a question of, I want to evict Joe, but Joe might beat me over the head, and if I go there to deliver the notice, maybe I should have some protection, then calls the police and the police decide to attend, that is a matter between the police and the individual, not with us.
Ms. Cerilli: Yes, it tells you something about tenant-management relations. I will draw that specific issue to the minister's attention with a letter.
I want to ask another quick question. I notice in the legislation outlined that is the responsibility of the Minister of Consumer and Corporate Affairs there is The Housing and Renewal Corporations Act. I am wanting to clarify which act that is. The reason I am asking is, I am wondering if this minister is going to have any involvement in the negotiations with the federal government on the devolution of responsibility for housing, if that is Canada Mortgage and Housing or--
Mr. Ernst: The answer is basically no. We are not going to be involved with the CMHC or the federal government. That will the Minister of Housing who does that. This reference deals with under the Emergency Repair Program where Residential Tenancies does not have any money of its own. In the event they had to go into an apartment building--as we did in Thompson, for instance, we went into the building and spent considerable amount of money to provide heat and certain other activities there. We have to borrow the money, so we borrow it from MHRC. That is why the reference.
Ms. Cerilli: A couple other quick things have to do with the areas of the city that have really poor rental housing stock. I have asked some questions in this vein before about setting up specific programs to do inspections in areas which are known to have very poor housing stock that would probably be substandard. I have asked about having a system with roving inspectors, and the City of Winnipeg's chief inspector had expressed some interest in that.
I am also concerned about, first of all, the lack of enforcement for regulations for rooming houses, group homes and boarding houses, where there could be no locks on doors; these are the areas, particularly on west Broadway and other areas in the core area where we often hear that there have been assaults and killings. I know that there was one right on Sara, Sara and Westminster area, and it was in a rooming house where the neighbourhood knows that there are no locks on the doors where the tenants have their own room but they are not secured.
Those are two areas that I am wanting to draw to the minister's attention that either there is poor regulations in the area of rooming houses or they are not enforced, and also then in those kind of areas to have some additional kind of programs to do inspections.
(Mr. Peter Dyck, Acting Chairperson, in the Chair)
The William Whyte area is another part of the city where they have done a study on the number of buildings that have absentee landlords, that are really in disrepair. I am wondering if we could have a better system to ensure that there are inspections in these neighbourhoods to improve the quality of the housing for the people that live there?
Mr. Ernst: We have two full-time inspectors working on repairs, but they operate on a complaint basis where 99 percent of the problems arise from by-law infractions under the City of Winnipeg whose Health department has significantly more inspectors. In fact, they do not need for a complaint; they can go in at random to inspect properties, and they can file their repair orders with us for enforcement, and they do not.
We have been trying to encourage them to do that. The problem is, of course, which is a rental house property and which is not? Repair orders are also made against properties that are not rented, but nonetheless, we would encourage them to do that. We will enforce them, if they file them with us. We have been trying to encourage them to do that and they are, so far, not doing it, at least not very regularly.
Ms. Cerilli: Just before we conclude on that, I know that I had asked questions and recommended before that we have an automatic system for the City of Winnipeg to refer the inspection orders for enforcement to the province. Can the minister tell us how we would go about making that a required procedure?
Mr. Ernst: Well, there are two ways of doing it, either agree to do it or legislate it.
Ms. Cerilli: Just to conclude, I will look forward to the legislation.
The Acting Chairperson (Mr. Dyck): Item 5.1.(b) Executive Support (1) Salaries and Employee Benefits $297,800--pass; (2) Other Expenditures $49,700--pass.
5.1.(c) Administrative Services (1) Salaries and Employee Benefits $544,400--pass; (2) Other Expenditures $179,800--pass; (3) Less: Recoverable from Legislative Assembly ($221,600)--pass.
5.1.(d) Research and Planning (1) Salaries and Employee Benefits $153,500--pass; (2) Other Expenditures $25,900--pass.
5.1.(e) Vital Statistics Agency, nil.
5.2.Consumer Affairs (a) Consumers' Bureau (1) Salaries and Employee Benefits $929,400--pass; (2) Other Expenditures $209,400--pass.
5.2.(b) Residential Tenancies (1) Salaries and Employee Benefits $2,494,500--pass; (2) Other Expenditures $637,200--pass.
5.2.(c) Automobile Injury Compensation Appeals Commission (1) Salaries and Employee Benefits $432,100--pass; (2) Other Expenditures $209,800--pass.
5.2.(d) Grants $89,700--pass.
Resolution 5.2: RESOLVED that there be granted to Her Majesty a sum not exceeding $5,002,100 for Consumer and Corporate Affairs, Consumer Affairs $5,002,100, for the fiscal year ending the 31st day of March 1997.
5.3. Corporate Affairs (a) Insurance Branch (1) Salaries and Employee Benefits $307,200--pass; (2) Other Expenditures $99,700--pass.
Mr. Ernst: With the co-operation of the members of the committee, can we deal just with the resolutions, or do we have to go through this line by line?
The Acting Chairperson (Mr. Dyck): Is it the will of the committee to sit past 5:30 p.m. It is agreed.
5.3.(b )Manitoba Securities Commission (1) Salaries and Employee Benefits $1,300,600--pass; (2) Other Expenditures $267,800--pass.
5.3.(c) Public Utilities Board (1) Salaries and Employee Benefits $657,100--pass; (2) Other Expenditures $1,225,700--pass.
5.3.(d) Trust and Loan Corporations Branch (1) Salaries and Employee Benefits $218,900--pass; (2) Other Expenditures $68,300--pass.
5.3.(e) Cooperative and Credit Union Regulation (1) Salaries and Employee Benefits $300,200; (2) Other Expenditures $52,300--pass.
5.3.(f) Land Titles Offices (1) Salaries and Employee Benefits $5,430,900--pass; (2) Other Expenditures $1,459,700--pass; (3) Less: Recoverable from other appropriations ($180,000)--pass.
5.3.(g) Personal Property Registry (1) Salaries and Employee Benefits $641,300--pass; (2) Other Expenditures $392,400--pass.
5.3.(h) Companies Office (1) Salaries and Employee Benefits, nil--pass; (2) Other Expenditures, nil--pass.
Resolution 5.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $12,242,100 for Consumer and Corporate Affairs, Corporate Affairs, for the fiscal year ending the 31st day of March, 1997.
We will turn to the Minister's Salary under 5.1.(a) for the amount of $25,200--pass.
Resolution 5.1: RESOLVED that there be granted to Her Majesty a sum not exceeding $1,054,700 for Consumer and Corporate Affairs, Administration and Finance, for the fiscal year ending the 31st day of March, 1997.
This completes the Estimates of Consumer and Corporate Affairs.
The committee is recessed until 9 a.m. tomorrow (Thursday).