May 10, 2002 

The Hon. Dr. Rey Pagtakhan
Minister of Veterans Affairs Canada
House of Commons
Ottawa, ON

RE: VETERANS CLASS ACTION INTEREST ON TRUST ACCOUNTS 

We have been advised that the Crown is seeking leave to have the decision by Mr. Justice Brockenshire, which was upheld by the Ontario Court of Appeal, go before the Supreme Court of Canada.

As we discussed at our meeting on May 8th, it seems obvious that further court action will cause unconscionable delays in resolving this issue.

Once again, may I draw your attention to the proposal submitted to your predecessor. This would have provided for a review procedure under which your Department could rule as to whether interest payments were justifiable in cases prior to the current effective date of January 1, 1990.

As I mentioned at our meeting, the original intention was a satisfactory procedure based on the "set-off" principle, in that the Department was administering the funds of veterans who were ruled incompetent to handle their own affairs. This was a service over and above the ordinary intent of the Pension and War Veterans Allowance Act. Accordingly, in view of the additional benefit of such service, there was no justification for the veteran to receive interest on his trust account.

As I pointed out, the situation changed when veterans began to accumulate large amounts of money because many of them were in receipt of full pay and special allowances, far in excess of their needs. It was my view that this change of circumstances placed your Department in the position of a trustee rather than the previous role of administering smaller amounts of money on behalf of this group of veterans.

Your Department has a significant number of files on this matter going back to 1970, all of which appear to indicate the Department was aware of the possibility that it could be held liable for the payment of interest. The amendment to the arrangements with the Treasury Board which commenced January 1, 1990 obviously left out a number of cases where the Department's role had changed from an administrator to that of trustee.

It should be possible to develop some guidelines which would indicate by the dollar value of the trust account, the time at which the Department became a natural custodian of the funds. It seems reasonable that interest should be paid on such amounts, irrespective of the January 1,1990 deadline.

I am aware that the view has been expressed within your Department that no action should be taken to establish any form of review committee while the matter is before the courts. My counter-argument to that is simply that the situation should be judged from the point of view of equity. The raison d'être has already been accepted by the Government by reason of its decision to commence payment of interest as of January 1, 1990. Once the Government accepted this as reasonable, there seems to be a significant argument that the January 1st deadline is what might be termed "artificial" and that if the Department can pay interest after January 1, 1990 it can pay interest prior to that in justifiable cases.

It would be appreciated if further consideration might be given now to the NCVA proposal which would see the establishment of a review committee with the authority to recommend payments based on a reasonable guideline which would indicate the appropriateness of such payments from the time upon which the Department was a trustee rather than an administrator. I would appreciate hearing from you at your convenience on this matter.

Yours sincerely,

H. Clifford Chadderton, CC, O.Ont., OStJ, CLJ, CAE, DCL, LLD
Chairman