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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2021-11-17 and last amended on 2021-06-30. Previous Versions

PART VIIIBusiness and Powers (continued)

General Business (continued)

Special Security (continued)

Marginal note:Priority of bank’s rights

  •  (1) All the rights and powers of a bank in respect of the property mentioned in or covered by a warehouse receipt or bill of lading acquired and held by the bank, and the rights and powers of the bank in respect of the property covered by security given to the bank under section 427 that are the same as if the bank had acquired a warehouse receipt or bill of lading in which that property was described, have, subject to subsection 427(4) and subsections (3) to (6) of this section, priority over all rights subsequently acquired in, on or in respect of that property, and also over the claim of any unpaid vendor or of any person who has a security interest in that property that was unperfected at the time the bank acquired its security in the property.

  • Marginal note:Affixation to real property

    (1.1) If security is given to the bank under paragraph 427(1)(c) or (m) consisting of aquacultural equipment, under paragraph 427(1)(d) or (n) consisting of agricultural equipment, under paragraph 427(1)(k) consisting of aquacultural equipment or an aquacultural electric system, under paragraph 427(1)(l) consisting of agricultural equipment or a farm electric system or under paragraph 427(1)(p) consisting of forestry equipment, the priority referred to in subsection (1) exists even if the property is or becomes affixed to real property.

  • Marginal note:Exception

    (2) The priority referred to in subsection (1) does not extend over the claim of any unpaid vendor who had a lien on the property, or of any person who has a security interest in the property that was unperfected at the time the bank acquired its warehouse receipt, bill of lading or security, if the bank acquired it with knowledge of that unpaid vendor’s lien or that other person’s security interest.

  • Marginal note:Bank required to register against land in certain cases

    (3) Where security has been given to a bank under paragraph 427(1)(c) or (m) consisting of aquacultural equipment, under paragraph 427(1)(d) or (n) consisting of agricultural equipment, under paragraph 427(1)(k) consisting of aquacultural equipment or an aquacultural electric system, under paragraph 427(1)(l) consisting of agricultural equipment or a farm electric system or under paragraph 427(1)(p) consisting of forestry equipment that is or has become affixed to real property, the rights and powers of the bank do not have priority over any interest or right acquired in, on or in respect of the real property after that property has become affixed thereto unless, prior to

    • (a) the registration of the interest or right, or

    • (b) the registration or filing of the deed or other instrument evidencing the interest or right, or of a caution, caveat or memorial in respect thereof,

    there has been registered or filed in the proper land registry or land titles office,

    • (c) an original of the document giving the security,

    • (d) a copy of the document giving the security, certified by an officer or employee of the bank to be a true copy, or

    • (e) a caution, caveat or memorial in respect of the rights of the bank.

  • Marginal note:Procedure for registering

    (4) Every registrar or officer in charge of the proper land registry or land titles office to whom a document mentioned in paragraph (3)(c), (d) or (e) is tendered shall register or file the document according to the ordinary procedure for registering or filing within that office documents that evidence liens or charges against, or cautions, caveats or memorials in respect of claims to, or interests or rights in respect of, real property and subject to payment of the like fees, but subsection (3) and this subsection do not apply if the provincial law does not permit such registration or filing of the tendered document.

  • Marginal note:Security on fishing vessels

    (5) If security has been given to a bank under paragraph 427(1)(o) on a fishing vessel that is recorded or registered under the Canada Shipping Act, 2001, the rights and powers of the bank do not have priority over any rights that are subsequently acquired in the vessel and are recorded or registered under that Act unless a copy of the document giving the security, certified by an officer of the bank to be a true copy, has been recorded or registered under that Act in respect of the vessel before the recording or registration under that Act of those rights.

  • Marginal note:Effect of registration of security

    (6) A copy of the document giving the security described in subsection (5), certified by an officer of the bank, may be recorded or registered under the Canada Shipping Act, 2001 as if it were a mortgage given under that Act and, on the recording or registration of the document, the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, has all the rights and powers in respect of the vessel that it would have if the security were a mortgage recorded or registered under that Act.

  • Marginal note:Sale of goods on non-payment of debt

    (7) In the event of non-payment of any debt, liability, loan or advance, as security for the payment of which a bank has acquired and holds a warehouse receipt or bill of lading or has taken any security under section 427, the bank may sell all or any part of the property mentioned therein or covered thereby and apply the proceeds against that debt, liability, loan or advance, with interest and expenses, returning the surplus, if any, to the person by whom the security was given.

  • Marginal note:Idem

    (8) The power of sale referred to in subsection (7) shall, unless the person by whom the security mentioned in that subsection was given has agreed to the sale of the property otherwise than as herein provided or unless the property is perishable and to comply with the following provisions might result in a substantial reduction in the value of the property, be exercised subject to the following provisions, namely,

    • (a) every sale of such property other than livestock shall be by public auction after

      • (i) notice of the time and place of the sale has been sent by registered mail to the recorded address of the person by whom the security was given, at least ten days prior to the sale in the case of any such property other than products of the forest, and at least thirty days prior to the sale in the case of any such property consisting of products of the forest, and

      • (ii) publication of an advertisement of the sale, at least two days prior to the sale, in at least two newspapers published in or nearest to the place where the sale is to be made stating the time and place thereof; and

    • (b) every sale of livestock shall be made by public auction not less than five days after

      • (i) publication of an advertisement of the time and place of the sale in a newspaper, published in or nearest to the place where the sale is to be made, and

      • (ii) posting of a notice in writing of the time and place of the sale, in or at the post office nearest to the place where the sale is to be made,

      and the proceeds of such a sale of livestock, after deducting all expenses incurred by the bank and all expenses of seizure and sale, shall first be applied to satisfy privileges, liens or pledges having priority over the security given to the bank and for which claims have been filed with the person making the sale, and the balance shall be applied in payment of the debt, liability, loan or advance, with interest and the surplus, if any, returned to the person by whom the security was given.

  • Marginal note:Right and title of purchaser

    (9) Any sale of property by a bank under subsections (7) and (8) vests in the purchaser all the right and title in and to the property that the person from whom security was taken under section 435 had when the security was given or that the person from whom security was taken under section 427 had when the security was given and that the person acquired thereafter.

  • Marginal note:Duty to act honestly and in good faith

    (10) In connection with any sale of property by a bank pursuant to subsections (7) and (8) or pursuant to any agreement between the bank and the person by whom the security was given, the bank shall act honestly and in good faith and shall deal with the property in a timely and appropriate manner having regard to the nature of the property and the interests of the person by whom the security was given and, in the case of a sale pursuant to an agreement, shall give the person by whom the security was given reasonable notice of the sale except where the property is perishable and to do so might result in a substantial reduction in the value of the property.

  • Marginal note:Duty to act expeditiously in respect of seized property

    (11) Subject to section 427 and this section and any agreement between the bank and the person by whom the property was given as security, where, pursuant to subsection 427(3), a bank takes possession of or seizes property given as security to the bank, the bank shall, as soon as is reasonably practical having regard to the nature of the property, sell the property or so much thereof as will enable it to satisfy the debt, liability, loan or advance, with interest and expenses, in relation to which the property was given as security.

  • Marginal note:Goods manufactured from articles pledged

    (12) Where goods, wares and merchandise are manufactured or produced from goods, wares and merchandise, or any of them, mentioned in or covered by any warehouse receipt or bill of lading acquired and held by a bank or any security given to a bank under section 427, the bank has the same rights and powers in respect of the goods, wares and merchandise so manufactured or produced, as well during the process of manufacture or production as after the completion thereof, and for the same purposes and on the same conditions as it had with respect to the original goods, wares and merchandise.

  • Marginal note:Subrogation of security

    (13) Where payment or satisfaction of any debt, liability, loan or advance in respect of which a bank has taken security under section 426, 427 or 435 is guaranteed by a third person and the debt, liability, loan or advance is paid or satisfied by the guarantor, the guarantor is subrogated in and to all of the powers, rights and authority of the bank under the security that the bank holds in respect thereof under sections 426, 427 and 435 and this section.

  • Marginal note:Bank may assign its rights

    (14) A bank may assign to any person all or any of its rights and powers in respect of any property on which security has been given to it under paragraph 427(1)(i), (j), (k), (l), (m), (n), (o) or (p), whereupon that person has all or any of the assigned rights and powers of the bank under that security.

  • 1991, c. 46, s. 428
  • 2001, c. 26, s. 275
  • 2012, c. 5, s. 38

Marginal note:Conditions under which bank may take security

  •  (1) A bank shall not acquire or hold any warehouse receipt or bill of lading, or any security under section 427, to secure the payment of any debt, liability, loan or advance unless the debt, liability, loan or advance is contracted or made

    • (a) at the time of the acquisition thereof by the bank, or

    • (b) on the written promise or agreement that a warehouse receipt or bill of lading or security under section 427 would be given to the bank, in which case the debt, liability, loan or advance may be contracted or made before or at the time of or after that acquisition,

    and such debt, liability, loan or advance may be renewed, or the time for the payment thereof extended, without affecting any security so acquired or held.

  • Marginal note:Exchange of one security for another

    (2) A bank may

    • (a) on the shipment of any property for which it holds a warehouse receipt or any security under section 427, surrender the receipt or security and receive a bill of lading in exchange therefor;

    • (b) on the receipt of any property for which it holds a bill of lading, or any security under section 427, surrender the bill of lading or security, store the property and take a warehouse receipt therefor, or ship the property, or part of it, and take another bill of lading therefor;

    • (c) surrender any bill of lading or warehouse receipt held by it and receive in exchange therefor any security that may be taken under this Act;

    • (d) when it holds any security under section 427 on grain in any elevator, take a bill of lading covering the same grain or grain of the same grade or kind shipped from that elevator, in lieu of that security, to the extent of the quantity shipped; and

    • (e) when it holds any security whatever covering grain, take in lieu of that security, to the extent of the quantity covered by the security taken, a bill of lading or warehouse receipt for, or any document entitling it under the Canada Grain Act to the delivery of, the same grain or grain of the same grade or kind.

Marginal note:Loans to receiver, liquidator, etc.

 A bank may lend money and make advances to a receiver, to a receiver and manager, to a liquidator appointed under any winding-up Act, or to a custodian, an interim receiver or a trustee under the Bankruptcy and Insolvency Act, if the receiver, receiver and manager, liquidator, custodian, interim receiver or trustee has been duly authorized or empowered to borrow, and, in making the loan or advance, and thereafter, the bank may take security, with or without personal liability, from the receiver, receiver and manager, liquidator, custodian, interim receiver or trustee to such an amount and on such property as may be directed or authorized by any court of competent jurisdiction.

  • 1991, c. 46, s. 430
  • 1992, c. 27, s. 90

Marginal note:Securities may be sold

 Securities acquired and held by a bank as security may, in case of default in the payment of the loan, advance or debt or in the discharge of the liability for the securing of which they were so acquired and held, be dealt with, sold and conveyed, in like manner as and subject to the restrictions under which a private individual might in like circumstances deal with, sell and convey the same, and the right to deal with and dispose of securities as provided in this section may be waived or varied by any agreement between the bank and the person by whom the security was given.

Marginal note:Rights in respect of personal property

 The rights, powers and privileges that a bank is by this Act declared to have, or to have had, in respect of real property on which it has taken security, shall be held and possessed by it in respect of any personal property on which it has taken security.

Marginal note:Purchase of realty

 A bank may purchase any real property offered for sale

  • (a) under execution, or in insolvency, or under the order or decree of a court, or at a sale for taxes, as belonging to any debtor to the bank,

  • (b) by a mortgagee or other encumbrancer, having priority over a mortgage or other encumbrance held by the bank, or

  • (c) by the bank under a power of sale given to it for that purpose, notice of the sale by auction to the highest bidder having been first given by advertisement for four weeks in a newspaper published in the county or electoral district in which the property is situated,

in cases in which, under similar circumstances, an individual could so purchase, without any restriction as to the value of the property that it may so purchase, and may acquire title thereto as any individual, purchasing at a sheriff’s sale or sale for taxes or under a power of sale, in like circumstances could do, and may take, have, hold and dispose of the property so purchased.

Marginal note:Bank may acquire absolute title

  •  (1) A bank may acquire and hold an absolute title in or to real property affected by a mortgage or hypothec securing a loan or an advance made by the bank or a debt or liability to the bank, either by the obtaining of a release of the equity of redemption in the mortgaged property, or by procuring a foreclosure, or by other means whereby, as between individuals, an equity of redemption can, by law, be barred, or a transfer of title to real property can, by law, be effected, and may purchase and acquire any prior mortgage or charge on such property.

  • Marginal note:No act or law to prevent

    (2) Nothing in any charter, Act or law shall be construed as ever having been intended to prevent or as preventing a bank from acquiring and holding an absolute title to and in any mortgaged or hypothecated real property, whatever the value thereof, or from exercising or acting on any power of sale contained in any mortgage given to or held by the bank, authorizing or enabling it to sell or convey any property so mortgaged.

Marginal note:Warehouse receipts and bills of lading

  •  (1) A bank may acquire and hold any warehouse receipt or bill of lading as security for the payment of any debt incurred in its favour, or as security for any liability incurred by it for any person, in the course of its banking business.

  • Marginal note:Effect of taking

    (2) Any warehouse receipt or bill of lading acquired by a bank under subsection (1) vests in the bank, from the date of the acquisition thereof,

    • (a) all the right and title to the warehouse receipt or bill of lading and to the goods, wares and merchandise covered thereby of the previous holder or owner thereof; and

    • (b) all the right and title to the goods, wares and merchandise mentioned therein of the person from whom the goods, wares and merchandise were received or acquired by the bank, if the warehouse receipt or bill of lading is made directly in favour of the bank, instead of to the previous holder or owner of the goods, wares and merchandise.

Marginal note:When previous holder is agent

  •  (1) Where the previous holder of a warehouse receipt or bill of lading referred to in section 435 is a person

    • (a) entrusted with the possession of the goods, wares and merchandise mentioned therein, by or by the authority of the owner thereof,

    • (b) to whom the goods, wares and merchandise are, by or by the authority of the owner thereof, consigned, or

    • (c) who, by or by the authority of the owner of the goods, wares and merchandise, is possessed of any bill of lading, receipt, order or other document covering the same, such as is used in the course of business as proof of the possession or control of goods, wares and merchandise, or as authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of such a document to transfer or receive the goods, wares and merchandise thereby represented,

    a bank is, on the acquisition of that warehouse receipt or bill of lading, vested with all the right and title of the owner of the goods, wares and merchandise, subject to the right of the owner to have the same re-transferred to the owner if the debt or liability, as security for which the warehouse receipt or bill of lading is held by the bank, is paid.

  • Marginal note:Possessor

    (2) For the purposes of this section, a person shall be deemed to be the possessor of goods, wares and merchandise, or a bill of lading, receipt, order or other document,

    • (a) who is in actual possession thereof; or

    • (b) for whom, or subject to whose control the goods, wares and merchandise are, or bill of lading, receipt, order or other document is, held by any other person.

 
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