Mr. Arvaluk.

Thank you, Mr. Chairman. On Clause 59(2)(b), "the satisfaction of the obligations secured by the security interest of the secured party disposing of the collateral," -- I wonder what that means -- "...and any surplus shall be dealt with in accordance with section 60." What I am understanding here is that the collateral owner or debtor may share some of the surplus. However, I do not see anywhere that the debtor could be or should be protected so that the collateral is not resold under value, except...I don't know. We seize your mobile home -- I will use Tony's scenario here -- that you bought for $10,000. You owe $4,000, so we seize your mobile home. However, the best offer we could get was $400, so you see, therefore, you still owe us $3,600. There is nothing for the debtor that he gets a fair shake out of that collateral, unless I am misreading that completely. The simplest part is there but the other side is not there.

Thank you. On the liability, Mr. Minister. You can assign the response to one of your witnesses at your discretion. Go ahead.

Thank you. The honourable Member for Aivilik, Mr. Arvaluk.

Mr. Chairman, I will try to be very clear here. What I am getting at here is that if the collateral is seized by the secured party and it may be disposed of through auction, that does not guarantee that it could be sold at book value. I guess my question is, is there any way that it can be properly, independently assessed, other than by the secured party, before it is disposed of for the purpose of liquidating it to pay for the original debt?

Thank you. Perhaps, Mr. Minister, you or one of your witnesses could respond to Mr. Arvaluk's question. Mr. Minister. The clock is ticking here, Mr. Minister.

Mr. MacDougall.

Thank you, Mr. Chairman. Section 65, subsection 3, provides a positive obligation on any of the parties to exercise any of the rights or duties or obligations.

Mr. MacDougall, we haven't gone to that clause yet. Are you referring to clause or section? Go ahead. I am told that you can answer. Go ahead. Continue.

The section creates a duty to act in a commercially reasonable manner. The enforcement of whether that has been done is dealt with in other sections where there is recourse to the courts if that is not done, but the obligation to act commercially reasonably and to not sell something under value is primarily from that particular provision and then the enforcement in a number of the other provisions.

Thank you. Mr. Arvaluk.

What you are saying is that if a person has a $100,000 boat, the boat has been seized, the collateral was a $50,000 cottage, and apparently, over a ten year period when the boat was not yet paid for, the soil has not been favourable or has rotted the foundations, the bank cannot turn around and say your cottage is no longer a $50,000 cottage, it is only a $10,000 cottage, because we have neglected to inspect the soil and it is rotted. Is that what subsection 65 will tell me?

Thank you. Mr. Minister.

Mr. MacDougall.

The commercially reasonable standard will be something that will apply to essentially all of the actions of the parties. One of those will be to maintain the collateral and to not devalue it during the course of still using the collateral when you are the borrower. So this section has a very broad application that is simply saying that you must be reasonable. You can't do something that wouldn't meet a standard that other people would consider reasonable in the circumstances.

Thank you. Clause 59. Mr. Arvaluk.

In this case, will the borrower be a party to assessing what is a reasonable value for the collateral once the collateral has been seized?

Thank you. Minister of Justice, Mr. Kakfwi.

I have Ms. Buckland and also Mr. Pollard. Mr. Pollard, did you have your hand up earlier? I guess he was trying to signal one of the pages. Ms. Buckland.

Thank you, Mr. Chairman. No, the debtor or the borrower would not have a say in assessing the value of the goods. However, the debtor is given notice of the sale before it happens and, in most circumstances, is given the chance to redeem the goods. In other words, in some circumstances, he is allowed to make any back payments and reinstate the security agreement to get it going again. Then he gets possession of the collateral back or he can pay out the whole price himself and get the collateral back. I hope that assists. Thank you, Mr. Chairman.