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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2019-06-20 and last amended on 2019-06-17. Previous Versions

PART VIIIBusiness and Powers (continued)

General Business (continued)

Special Security (continued)

Marginal note:Loans on hydrocarbons and minerals

  •  (1) A bank may lend money and make advances on the security of any or all of the following, namely,

    • (a) hydrocarbons or minerals in, under or on the ground, in place or in storage,

    • (b) the rights, licences or permits of any person to obtain and remove any such hydrocarbons or minerals and to enter on, occupy and use lands from or on which any of such hydrocarbons or minerals are or may be extracted, mined or produced,

    • (c) the estate or interest of any person in or to any such hydrocarbons or minerals, rights, licences, permits and lands whether the estate or interest is entire or partial, and

    • (d) the equipment and casing used or to be used in extracting, mining or producing or seeking to extract, mine or produce, and storing any such, hydrocarbons or minerals,

    or of any rights or interests in or to any of the foregoing whether the security be taken from the borrower or from a guarantor of the liability of the borrower or from any other person.

  • Marginal note:Security

    (2) Security under this section may be given by signature and delivery to the bank, by or on behalf of the person giving the security, of an instrument in the prescribed form or in a form to the like effect, and shall affect the property described in the instrument giving the security

    • (a) of which the person giving the security is the owner at the time of the delivery of the instrument, or

    • (b) of which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,

    all of which property is for the purposes of this Act property covered by the security.

  • Marginal note:Rights under security

    (3) Any security given under this section vests in the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, full power, right and authority, through its officers, employees or agents, in the event of

    • (a) non-payment of any loan or advance as security for the payment of which the bank has taken the security, or

    • (b) failure to care for, maintain, protect or preserve the property covered by the security,

    to do all or any of the following, namely, take possession of, seize, care for, maintain, use, operate and, subject to the provisions of any other Act and any regulations made under any other Act governing the ownership and disposition of the property that is the subject of the security, sell the property covered by the security or part thereof as it sees fit.

  • Marginal note:Liability to account for surplus

    (4) Where a bank exercises any right conferred on it by subsection (3) in relation to property given to it as security, the bank shall provide to the person entitled thereto any surplus proceeds resulting from the exercise of the right that remain after payment of all loans and advances, together with interest and expenses, in relation to which the property was given as security.

  • Marginal note:Effect of sale

    (5) A sale pursuant to subsection (3) of any property given to a bank as security vests in the purchaser all the right and title in and to such property that the person giving the security had when the security was given and that that person thereafter acquired.

  • Marginal note:Sale to be by public auction

    (6) Unless a person by whom property was given to a bank as security has agreed otherwise, a sale pursuant to subsection (3) shall be made by public auction after

    • (a) 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 property was given as security at least ten days prior to the sale; and

    • (b) 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.

  • Marginal note:Priority of bank’s rights

    (7) Subject to subsections (8), (9) and (10), all the rights and powers of a bank in respect of the property covered by security given under this section have priority over all rights subsequently acquired in, on or in respect of the property and also over the claim of any mechanics’ lien holder, of any unpaid vendor of equipment or casing or of any person who had a security interest in that property that was unperfected at the time the bank acquired its security in the property.

  • Marginal note:Exception

    (7.1) The priority referred to in subsection (7) does not extend over the claim of any unpaid vendor who had a lien on the equipment or casing, or of any person who has a security interest in the property that was unperfected at the time the bank acquired its security in the property, if the bank acquired its security with knowledge of that unpaid vendor’s lien or that other person’s security interest.

  • Marginal note:Idem

    (8) The rights and powers of a bank in respect of the property covered by security given under this section do not have priority over an interest or a right acquired in, on or in respect of the property unless, prior to

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

    • (b) the registration or filing of the deed or other instrument evidencing such 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 or office in which are recorded the rights, licences or permits referred to in this section,

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

    • (d) a copy of the instrument 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

    (9) Every registrar or officer in charge of the proper land registry or land titles or other office to whom a document mentioned in paragraph (8)(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, interests in or rights in respect of any such property and subject to payment of the like fees.

  • Marginal note:Exception

    (10) Subsections (8) and (9) do not apply if the law of the appropriate province does not permit the registration or filing of the tendered document or if any law enacted by or under the authority of Parliament, governing the ownership and disposal of the property that is the subject of security given under this section, does not provide by specific reference to this section for the registration or filing of the tendered document.

  • Marginal note:Further security

    (11) When making a loan or an advance on the security provided for by this section, a bank may take, on any property covered by the security, any further security it sees fit.

  • Marginal note:Substitution of security

    (12) Notwithstanding anything in this Act, where the bank holds any security covering hydrocarbons or minerals, it may take in lieu of that security, to the extent of the quantity covered by the security taken, any security covering or entitling it to the delivery of the same hydrocarbons or minerals or hydrocarbons or minerals of the same or a similar grade or kind.

  • 1991, c. 46, s. 426
  • 2012, c. 5, s. 37

Marginal note:Loans to certain borrowers and security

  •  (1) A bank may lend money and make advances

    • (a) to any wholesale or retail purchaser or shipper of, or dealer in, products of agriculture, products of aquaculture, products of the forest, products of the quarry and mine, products of the sea, lakes and rivers or goods, wares and merchandise, manufactured or otherwise, on the security of such products or goods, wares and merchandise and of goods, wares and merchandise used in or procured for the packing of such products or goods, wares and merchandise,

    • (b) to any person engaged in business as a manufacturer, on the security of goods, wares and merchandise manufactured or produced by that person or procured for such manufacture or production and of goods, wares and merchandise used in or procured for the packing of goods, wares and merchandise so manufactured or produced,

    • (c) to any aquaculturist, on the security of aquacultural stock growing or produced in the aquaculture operation or on the security of aquacultural equipment or aquacultural implements,

    • (d) to any farmer, on the security of crops growing or produced on the farm or on the security of agricultural equipment or agricultural implements,

    • (e) to any aquaculturist

      • (i) for the purchase of aquatic broodstock or aquatic seedstock, on the security of the aquatic broodstock or aquatic seedstock and any aquatic stock to be grown therefrom,

      • (ii) for the purchase of pesticide, on the security of the pesticide and any aquatic stock to be grown from the site on which the pesticide is to be used, and

      • (iii) for the purchase of feed, veterinary drugs, biologicals or vaccines, on the security of the feed, veterinary drugs, biologicals or vaccines and any aquatic stock to be grown in the aquaculture operation on which the feed, veterinary drugs, biologicals or vaccines are to be used,

    • (f) to any farmer

      • (i) for the purchase of seed grain or seed potatoes, on the security of the seed grain or seed potatoes and any crop to be grown therefrom, and

      • (ii) for the purchase of fertilizer or pesticide, on the security of the fertilizer or pesticide and any crop to be grown from land on which, in the same season, the fertilizer or pesticide is to be used,

    • (g) to any aquaculturist on the security of aquatic plants and animals, but security taken under this paragraph is not effective in respect of any aquatic plants and animals that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the aquaculturist is prevented from giving as security for money lent to the aquaculturist,

    • (h) to any farmer or to any person engaged in livestock raising, on the security of feed or livestock, but security taken under this paragraph is not effective in respect of any livestock that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the farmer or other person engaged in livestock raising is prevented from giving as security for money lent to the farmer or other person,

    • (i) to any aquaculturist for the purchase of aquacultural implements, on the security of those aquacultural implements,

    • (j) to any farmer for the purchase of agricultural implements, on the security of those agricultural implements,

    • (k) to any aquaculturist for the purchase or installation of aquacultural equipment or an aquacultural electric system, on the security of that aquacultural equipment or aquacultural electric system,

    • (l) to any farmer for the purchase or installation of agricultural equipment or a farm electric system, on the security of that agricultural equipment or farm electric system,

    • (m) to any aquaculturist for

      • (i) the repair or overhaul of an aquacultural implement, aquacultural equipment or an aquaculture electric system,

      • (ii) the alteration or improvement of an aquacultural electric system,

      • (iii) the erection or construction of fencing or works for drainage in an aquaculture operation for the holding, rearing or protection of aquatic plants and animals or for the supply of water to such plants and animals or the disposal of effluent from them,

      • (iv) the construction, repair or alteration of or making of additions to any building or structure in an aquaculture operation, and

      • (v) any works for the improvement or development of an aquaculture operation for which a loan, as defined in the Canada Small Business Financing Act, or a business improvement loan, as defined in the Small Business Loans Act, may be made,

      on the security of aquacultural equipment or aquacultural implements, but security taken under this paragraph is not effective in respect of aquacultural equipment or aquacultural implements that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the aquaculturist is prevented from giving as security for money lent to the aquaculturist,

    • (n) to any farmer for

      • (i) the repair or overhaul of an agricultural implement, agricultural equipment or a farm electric system,

      • (ii) the alteration or improvement of a farm electric system,

      • (iii) the erection or construction of fencing or works for drainage on a farm,

      • (iv) the construction, repair or alteration of or making of additions to any building or structure on a farm,

      • (v) [Repealed, 2009, c. 15, s. 13]

      • (vi) any purpose for which a loan as defined in the Canadian Agricultural Loans Act may be made,

      on the security of agricultural equipment or agricultural implements, but security taken under this paragraph is not effective in respect of agricultural equipment or agricultural implements that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the farmer is prevented from giving as security for money lent to the farmer,

    • (o) to any fisherman, on the security of fishing vessels, fishing equipment and supplies or products of the sea, lakes and rivers, but security taken under this paragraph is not effective in respect of any such property that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the fisherman is prevented from giving as security for money lent to the fisherman, and

    • (p) to any forestry producer, on the security of fertilizer, pesticide, forestry equipment, forestry implements or products of the forest, but security taken under this paragraph is not effective in respect of any such property that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the forestry producer is prevented from giving as security for money lent to the forestry producer,

    and the security may be given by signature and delivery to the bank, by or on behalf of the person giving the security, of a document in the prescribed form or in a form to the like effect.

  • Marginal note:Rights and powers vested by delivery of document

    (2) Delivery of a document giving security on property to a bank under the authority of this section vests in the bank in respect of the property therein described

    • (a) of which the person giving security is the owner at the time of the delivery of the document, or

    • (b) of which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,

    the following rights and powers, namely,

    • (c) if the property is property on which security is given under paragraph (1)(a), (b), (g), (h), (i), (j) or (o), under paragraph (1)(c) or (m) consisting of aquacultural implements, under paragraph (1)(d) or (n) consisting of agricultural implements or under paragraph (1)(p) consisting of forestry implements, the same rights and powers as if the bank had acquired a warehouse receipt or bill of lading in which that property was described, or

    • (d) if the property

      • (i) is property on which security is given under paragraph (1)(c) consisting of aquacultural stock growing or produced in the aquaculture operation or aquacultural equipment,

      • (ii) is property on which security is given under paragraph (1)(d) consisting of crops or agricultural equipment,

      • (iii) is property on which security is given under any of paragraphs (1)(e), (f), (k) and (l),

      • (iv) is property on which security is given under paragraph (1)(m) consisting of aquacultural equipment,

      • (v) is property on which security is given under paragraph (1)(n) consisting of agricultural equipment, or

      • (vi) is property on which security is given under paragraph (1)(p) consisting of forestry equipment,

      a first and preferential lien and claim thereon for the sum secured and interest thereon, and as regards a crop as well before as after the severance from the soil, harvesting or threshing thereof, and, in addition thereto, the same rights and powers in respect of the property as if the bank had acquired a warehouse receipt or bill of lading in which the property was described, and all rights and powers of the bank subsist notwithstanding that the property is affixed to real property and notwithstanding that the person giving the security is not the owner of that real property,

    and all such property in respect of which such rights and powers are vested in the bank under this section is for the purposes of this Act property covered by the security.

  • Marginal note:Power of the bank to take possession, etc.

    (3) Where security on any property is given to a bank under any of paragraphs (1)(c) to (p), the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, has full power, right and authority, through its officers, employees or agents, in the case of

    • (a) non-payment of any of the loans or advances for which the security was given,

    • (b) failure to care for or harvest any crop or to care for any livestock covered by the security,

    • (c) failure to care for or harvest any aquatic stock growing or produced in the aquaculture operation or to care for any aquatic plants and animals covered by the security,

    • (d) failure to care for any property on which security is given under any of paragraphs (1)(i) to (p),

    • (e) any attempt, without the consent of the bank, to dispose of any property covered by the security, or

    • (f) seizure of any property covered by the security,

    to take possession of or seize the property covered by the security, and in the case of aquacultural stock growing or produced in the aquaculture operation or a crop growing or produced on the farm to care for it and, where applicable, harvest it or thresh the grain therefrom, and in the case of livestock or aquatic plants and animals to care for them, and has the right and authority to enter on any land, premises or site whenever necessary for any such purpose and to detach and remove such property, exclusive of wiring, conduits or piping incorporated in a building, from any real property to which it is affixed.

  • Marginal note:Notice of intention

    (4) The following provisions apply where security on property is given to a bank under this section:

    • (a) the rights and powers of the bank in respect of property covered by the security are void as against creditors of the person giving the security and as against subsequent purchasers or mortgagees in good faith of the property covered by the security unless a notice of intention signed by or on behalf of the person giving the security was registered in the appropriate agency not more than three years immediately before the security was given;

    • (b) registration of a notice of intention may be cancelled by registration in the appropriate agency in which the notice of intention was registered of a certificate of release signed on behalf of the bank named in the notice of intention stating that every security to which the notice of intention relates has been released or that no security was given to the bank, as the case may be;

    • (c) every person, on payment of the fee prescribed pursuant to subsection (6), is entitled to have access through the agent to any system of registration, notice of intention or certificate of release kept by or in the custody of the agent;

    • (d) any person desiring to ascertain whether a notice of intention given by a person is registered in an agency may inquire by sending a prepaid telegram or written communication addressed to the agent, and it is the duty of the agent, in the case of a written inquiry, only if it is accompanied by the payment of the fee prescribed pursuant to subsection (6), to make the necessary examination of the information contained in the system of registration and of the relevant documents, if any, and to reply to the inquirer stating the name of the bank mentioned in any such notice of intention, which reply shall be sent by mail unless a telegraphic reply is requested, in which case it shall be sent at the expense of the inquirer; and

    • (e) evidence of registration in an agency of a notice of intention or a certificate of release and of the place, date, time and serial number, if any, of its registration may be given by the production of a copy of the notice of intention or certificate of release duly certified by the agent to be a true copy thereof without proof of the signature or of the official character of the agent.

  • Marginal note:Definitions

    (5) In subsections (4) and (6),

    agency

    agency means, in a province, the office of the Bank of Canada or its authorized representative but does not include its Ottawa office, and in Yukon, the Northwest Territories and Nunavut means the office of the clerk of the court of each of those territories respectively; (agence)

    agent

    agent means the officer in charge of an agency, and includes any person acting for that officer; (agent)

    appropriate agency

    appropriate agency means

    • (a) the agency for the province in which is located the place of business of the person by whom or on whose behalf a notice of intention is signed,

    • (b) if that person has more than one place of business in Canada and the places of business are not in the same province, the agency for the province in which is located the principal place of business of that person, or

    • (c) if that person has no place of business, the agency for the province in which the person resides,

    and in respect of any notice of intention registered before the day this Part comes into force, means the office in which registration was required to be made by the law in force at the time of such registration; (agence appropriée)

    notice of intention

    notice of intention means a notice of intention in the prescribed form or in a form to the like effect, and includes a notice of intention registered before the day this Part comes into force, in the form and registered in the manner required by the law in force at the time of the registration of the notice of intention; (préavis)

    principal place of business

    principal place of business means

    • (a) in the case of a body corporate incorporated by or under an Act of Parliament or the legislature of a province, the place where, according to the body corporate’s charter, memorandum of association or by-laws, the head office of the body corporate in Canada is situated, and

    • (b) in the case of any other body corporate, the place at which a civil process in the province in which the loans or advances will be made can be served on the body corporate; (principal établissement)

    system of registration

    system of registration means all registers and other records required by subsection (4) to be prepared and maintained and any such system may be in a bound or loose-leaf form or in a photographic film form, or may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time. (archives)

  • Marginal note:Regulations

    (6) The Governor in Council may, for the purposes of this section, make regulations

    • (a) respecting the practice and procedure for the operation of a system of registration, including registration of notices of intention, the cancellation of such registrations and access to the system of registration;

    • (b) requiring the payment of fees relating to the system of registration and prescribing the amounts thereof; and

    • (c) respecting any other matter necessary for the maintenance and operation of a system of registration.

  • Marginal note:Priority of wages and money owing for perishable agricultural products

    (7) Despite subsection (2) and despite the fact that a notice of intention by a person giving security on property under this section has been registered under this section, if, under the Bankruptcy and Insolvency Act, a bankruptcy order is made against, or an assignment is made by, that person,

    • (a) claims for wages, salaries or other remuneration owing in respect of the period of three months immediately preceding the making of the order or assignment, to employees of the person employed in connection with the business or farm in respect of which the property covered by the security was held or acquired by the person, and

    • (b) claims of a grower or producer of products of agriculture for money owing by a manufacturer to the grower or producer for such products that were grown or produced by the grower or producer on land owned or leased by the grower or producer and that were delivered to the manufacturer during the period of six months immediately preceding the making of the order or assignment to the extent of the lesser of

      • (i) the total amount of the claims of the grower or producer therefor, and

      • (ii) the prescribed amount

    have priority over the rights of the bank in a security given to the bank under this section, in the order in which they are mentioned in this subsection, and if the bank takes possession or in any way disposes of the property covered by the security, the bank is liable for those claims to the extent of the net amount realized on the disposition of the property, after deducting the cost of realization, and the bank is subrogated in and to all the rights of the claimants to the extent of the amounts paid to them by the bank.

  • (8) [Repealed, 1997, c. 15, s. 47]

  • 1991, c. 46, s. 427
  • 1992, c. 27, s. 90
  • 1993, c. 6, s. 6(E), c. 28, s. 78
  • 1997, c. 15, s. 47
  • 1998, c. 36, s. 21
  • 2002, c. 7, s. 82(E)
  • 2004, c. 25, s. 185
  • 2009, c. 15, s. 13
 
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