Short Title

Marginal note:Short title

1 This Act may be cited as the Farm Improvement and Marketing Cooperatives Loans Act.

Interpretation

Marginal note:Definitions

2 In this Act,

farm products marketing cooperative

coopérative de commercialisation des produits agricoles

farm products marketing cooperative means a cooperative association incorporated under the laws of Canada or a province for the purpose of processing, distributing or marketing on a cooperative basis the products of farming, each member or shareholder of which is a farmer; (coopérative de commercialisation des produits agricoles)

farmer

agriculteur

farmer means any individual, partnership, corporation or cooperative association that is engaged in farming in Canada; (agriculteur)

farming

agriculture

farming means the production of field-grown crops, cultivated and uncultivated, and horticultural crops, the raising of livestock, poultry and fur-bearing animals, the production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from woodlots and fodder crops and the production or raising of any other prescribed thing or animal; (agriculture)

lender

prêteur

lender means

• (a) a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,

• (b) a credit union, caisse populaire or other cooperative credit society that is designated by the Minister on the application of that society as a lender for the purposes of this Act,

• (c) a company within the meaning of the Trust and Loan Companies Act, or a company, society or provincial company within the meaning of the Insurance Companies Act, that is designated by the Minister on the application of that company, society or provincial company as a lender for the purposes of this Act, or

• (d) a Province of Alberta Treasury Branch established pursuant to the Treasury Branches Act, chapter T-7 of the Revised Statutes of Alberta 1980; (prêteur)

loan

prêt

loan means a loan in respect of which this Act applies by virtue of section 3; (prêt)

Minister

ministre

Minister means the Minister of Agriculture and Agri-Food; (ministre)

prescribed

Version anglaise seulement

prescribed means prescribed by regulation. (Version anglaise seulement)

Application

Marginal note:Application

3 This Act applies in respect of

• (a) loans made for a purpose that is described in subsection 4(1) or 6(1); and

• (b) losses sustained by lenders as a result of loans referred to in paragraph (a).

Guaranteed Farm Improvement Loans

Marginal note:Payment of lenders’ losses

• 4 (1) Subject to this Act and, in particular, to the conditions set out in subsection (3), the Minister is liable to pay to a lender ninety-five per cent of any loss sustained by it as a result of a loan made by it to a farmer for any of the following purposes in relation to farming in Canada:

  • (a) the purchase of, major repair to or major overhaul of tools, implements, apparatus and machines of any kind not usually affixed to real property;

  • (b) the purchase or installation of, major repair to or major overhaul of

    • (i) implements, apparatus and machinery of any kind usually affixed to real property, or

    • (ii) machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;

  • (c) the purchase of livestock, including

    • (i) horses and other equines,

    • (ii) cattle, sheep, goats and other ruminants,

    • (iii) swine, poultry, bees and fur-bearing animals, and

    • (iv) any other prescribed animal;

  • (d) the alteration or improvement of machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;

  • (e) the erection or construction of fencing or works for drainage;

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

  • (g) the purchase of additional land;

  • (h) any other purpose that is prescribed; or

  • (i) the consolidation or refinancing of the debts of the farmer incurred for such purpose described in any of paragraphs (a) to (h) as is prescribed.

• Marginal note:Exclusion of home improvements

  (2) Subsection (1) does not apply in respect of a loan made for the purpose of financing improvements to a private dwelling.

• Marginal note:Conditions

  (3) The conditions referred to in subsection (1) are as follows:

  • (a) the loan was made pursuant to an application signed by the farmer in the form established or approved by the Minister, stating the purpose for which the proceeds of the loan were to be expended;

  • (b) the application stated that the farmer held an interest in the farming operation of the nature prescribed for loans made for that purpose;

  • (c) the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other loans under this Act and guaranteed farm improvement loans under the Farm Improvement Loans Act previously made to the farmer and disclosed in the farmer’s application, or of which the lender has knowledge, exceed two hundred and fifty thousand dollars;

  • (d) the loan was repayable in full by the terms thereof

    • (i) in the case of a loan made for the purpose described in paragraph (1)(g), in not more than fifteen years, and

    • (ii) in the case of a loan made for any other purpose, in not more than ten years;

  • (e) no fee, service charge or charge of any kind was by the terms of the loan payable to the lender in respect of the loan as long as the farmer was not in default, other than

    • (i) a prescribed fee or charge,

    • (ii) a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), and

    • (iii) interest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;

  • (f) the repayment of the loan was secured in the prescribed manner;

  • (g) the loan was made on such terms and in accordance with such conditions, in addition to those specified in paragraphs (a) to (f), as were prescribed for loans made for that purpose; and

  • (h) the lender exercised the same care and prudence in granting and administering the loan as it exercises in granting and administering, in the ordinary course of its business, loans in respect of which this Act does not apply.

Marginal note:Principal amount where joint borrowers

• 5 (1) For the purposes of paragraph 4(3)(c), the principal amount of a loan shall, where the loan was made jointly to two or more farmers each of whom held a prescribed interest in a separate farm, and the principal amount of the loan did not exceed two hundred and fifty thousand dollars, be deemed to be, in respect of each of those farmers, an amount equal to the amount obtained by dividing the principal amount of the loan by the number of farmers.

• Marginal note:Amount owing where joint borrowers

  (2) For the purposes of paragraph 4(3)(c), the amount owing in respect of any loan previously made to a farmer shall, where the loan was made jointly to that farmer and one or more other farmers each of whom held a prescribed interest in a separate farm, be deemed to be an amount equal to the amount obtained by dividing the amount owing in respect of that loan by the number of farmers.

Guaranteed Farm Products Marketing Loans

Marginal note:Payment of lenders’ losses

• 6 (1) Subject to this Act and, in particular, to the conditions set out in subsection (2), the Minister is liable to pay to a lender ninety-five per cent of any loss sustained by it as a result of a loan made by it to a farm products marketing cooperative for any of the following purposes in relation to the processing, distribution or marketing in Canada of the products of farming:

  • (a) the purchase of land;

  • (b) the purchase or construction of any building or structure;

  • (c) the repair or alteration of, or making of additions to, any building or structure;

  • (d) the purchase or repair of machinery or apparatus; or

  • (e) the consolidation or refinancing of the debts of the cooperative incurred for such purpose described in any of paragraphs (a) to (d) as is prescribed.

• Marginal note:Conditions

  (2) The conditions referred to in subsection (1) are as follows:

  • (a) the loan was made pursuant to an application signed by the farm products marketing cooperative in the form established or approved by the Minister stating the purpose for which the proceeds of the loan were to be expended;

  • (b) the application stated that all of the members or shareholders, as the case may be, of the farm products marketing cooperative are farmers and that the cooperative held an interest in the marketing cooperative operation of the nature prescribed for loans made for that purpose;

  • (c) the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other loans previously made to the farm products marketing cooperative and disclosed in the application of the cooperative or of which the lender has knowledge, exceed two hundred and fifty thousand dollars or such greater amount as is approved by the Minister pursuant to subsection (3);

  • (d) the loan was repayable in full by the terms thereof

    • (i) in the case of a loan made for the purpose described in paragraph (1)(a) or (b), in not more than twenty years, and

    • (ii) in the case of a loan made for any other purpose, in not more than ten years;

  • (e) no fee, service charge or charge of any kind was by the terms of the loan payable to the lender in respect of the loan as long as the farm products marketing cooperative was not in default, other than

    • (i) a prescribed fee or charge,

    • (ii) a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), and

    • (iii) interest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;

  • (f) the repayment of the loan was secured in the prescribed manner;

  • (g) the loan was made on such terms and in accordance with such conditions, in addition to those specified in paragraphs (a) to (f), as were prescribed for loans made for that purpose; and

  • (h) the lender exercised the same care and prudence in granting and administering the loan as it exercises in granting and administering, in the ordinary course of its business, loans in respect of which this Act does not apply.

• Marginal note:Minister may increase limit

  (3) The Minister may, on the application of a lender made prior to the granting of a loan, approve an increase in the monetary limit referred to in paragraph (2)(c) to an amount not exceeding three million dollars.

Limitation of Minister’s Liability

Marginal note:Aggregate limit

7 The Minister is not liable under this Act to make any payment to a lender in respect of loss sustained by it as a result of a loan made by it during a fiscal year after the aggregate principal amount of the loans under this Act and of the guaranteed farm improvement loans under the Farm Improvement Loans Act made during that fiscal year and the four preceding fiscal years by all lenders exceeds three billion dollars.

Marginal note:Limit re lender

8 The Minister is not liable under this Act to pay to a lender in respect of losses sustained by it as a result of loans made by it during a fiscal year and the four preceding fiscal years a total amount in excess of

• (a) ninety per cent of that part of the aggregate principal amount of the loans made by it during that fiscal year and the four preceding fiscal years that does not exceed one million dollars;

• (b) fifty per cent of that part of the aggregate principal amount of the loans made by it during that fiscal year and the four preceding fiscal years that exceeds one million dollars but does not exceed two million dollars; and

• (c) ten per cent of that part of the aggregate principal amount of the loans made by it during that fiscal year and the four preceding fiscal years that exceeds two million dollars.

Marginal note:Limit re appraised value

9 The Minister is not liable under this Act to make any payment to a lender in respect of that portion of the loss sustained by it as a result of a loan that exceeds eighty per cent of the appraised value, determined as of the day the loan is made, of the property in respect of which the loan is made.

Marginal note:Limit re loans over $100,000

10 The Minister is not liable under this Act to make any payment to a lender in respect of loss sustained by it as a result of a loan made to a farmer where, at the time of the making of the loan, the proportion that

• (a) the aggregate of all of the lender’s outstanding loans to farmers, the principal amount of which exceeds one hundred thousand dollars

is of

• (b) the aggregate of the principal of all its outstanding loans to farmers

exceeds the prescribed proportion.

Marginal note:Exception where risk increased

11 The Minister is not liable under this Act to make any payment to a lender in respect of any loss sustained by it as a result of a loan where, after the loan is made, the farmer or farm products marketing cooperative and the lender enter into an arrangement or agreement, whether or not it alters or revises the terms or conditions of that loan, that might increase the risk that the loan will not be repaid according to its terms, unless the Minister approves the arrangement or agreement before it is entered into.

Marginal note:Compliance required

• 12 (1) The Minister is not liable under this Act to make any payment to a lender in respect of any loss sustained by it as a result of a loan unless

  • (a) the lender has complied with the regulations made pursuant to this Act; and

  • (b) the lender has, at such time as is prescribed, paid to the Minister a fee of one-half of one per cent of the amount of the loan or such other fee as is prescribed or calculated in the manner prescribed.

• Marginal note:Partial refund of fee

  (2) Where a lender advances less than three quarters of the amount of a loan to a farmer or farm products marketing cooperative, the Minister may, on application by the lender made within one year after the first instalment of the loan was advanced, refund to the lender that portion of the fee paid pursuant to paragraph (1)(b) that is attributable to the unadvanced portion of the loan.

Marginal note:Legal fees

13 The Minister is not liable to pay the portion of a loss sustained by a lender that is attributable to legal fees, costs or disbursements incurred by the lender unless those fees, costs or disbursements are assessed and allowed by the Deputy Minister of Justice.

Marginal note:Termination of operation of sections 4 and 6

• 14 (1) The Minister may, with the approval of the Governor in Council, by notice to a lender terminate the operation of section 4 or 6 in respect of loans made for any purpose, such termination to be effective after a time set out in the notice, and the Minister is not liable under this Act to make any payment to the lender in respect of any loan made for that purpose by the lender after that time.

• Marginal note:When notice of termination effective

  (2) A notice given to a lender under subsection (1) is not effective unless the time of termination set out therein is at least twenty-four hours after receipt of the notice at the head office of the lender.

Regulations and Orders

Marginal note:Regulations

• 15 (1) The Governor in Council may, on the recommendation of the Minister and the Minister of Finance, make regulations

  • (a) defining for the purposes of this Act “repair”, “alteration”, “additions”, “major”, in relation to “repair” and “overhaul”, and “works for drainage”;

  • (b) prescribing, in respect of loans made for any purpose,

    • (i) the security to be taken by the lender for the repayment of loans made for that purpose,

    • (ii) the terms of repayment and other terms, including provisions in respect of insurance, on which loans made for that purpose are to be made, and

    • (iii) the maximum rate of interest payable by a farmer or farm products marketing cooperative or the manner of determining that maximum rate;

  • (c) prescribing that in the event of actual or impending default in the repayment of a loan the lender may, with the approval of the Minister and the farmer or farm products marketing cooperative, alter or revise by way of an extension of time or otherwise any of the terms of the loan, or any agreement in connection therewith, and that an alteration or revision shall not discharge the liability of the Minister in respect thereof under this Act;

  • (d) prescribing, in the event of default in the repayment of a loan, the legal or other measures to be taken by the lender and the procedure to be followed for the collection of the amount of the loan outstanding and the disposal or realization of any security for the repayment thereof held by the lender;

  • (e) prescribing the method of determination of the amount of loss sustained by a lender as a result of a loan;

  • (f) prescribing the procedure to be followed by a lender in making a claim for any loss sustained by it as a result of a loan;

  • (g) prescribing the steps to be taken by a lender to effect collection on behalf of the Minister of any loan in respect of which any payment has been made by the Minister to the lender under this Act and providing that, in the event of neglect by the lender to take such steps, the amount of the payment may be recovered by the Minister;

  • (h) requiring reports to be made periodically to the Minister by a lender in respect of loans made by it;

  • (i) prescribing any thing that is by this Act to be prescribed; and

  • (j) generally for carrying out the purposes and provisions of this Act.

• Marginal note:Amendment of section 4 or 6

  (2) The Governor in Council may, by order made on the recommendation of the Minister and the Minister of Finance, amend subsections 4(1) and 6(1) by striking out the percentage set out therein and by substituting therefor another percentage not exceeding ninety-five per cent.

16 [Repealed, 1992, c. 1, s. 146]

Offences and Punishment

Marginal note:False statements or misuse of loan

• 17 (1) Every person who makes a statement in an application for a loan that is false in any material respect or who uses the proceeds of a loan for a purpose other than that stated in that person’s application is guilty of an offence and liable on summary conviction to a fine of not more than two thousand dollars.

• Marginal note:Penalty

  (2) Where a person is convicted of an offence under subsection (1), there shall be imposed on that person, in addition to any fine, a penalty equal to such amount of the loan made to that person in respect of which the offence was committed as has not been repaid by him, with interest thereon to the date of the conviction.

• Marginal note:Payment to lender or Receiver General

  (3) The penalty referred to in subsection (2) shall be paid to the lender by which the loan was made or, if payment has been made by the Minister to the lender in respect of the loan under this Act, the penalty shall be paid to the Receiver General, and payment of the penalty discharges the liability of the person to repay the loan.

• Marginal note:Limitation period

  (4) Proceedings in respect of an offence under this section may be commenced at any time within twelve months after the day on which evidence, sufficient in the opinion of the Minister to justify prosecution for the offence, comes to the Minister’s knowledge, but may not be commenced later than three years after the time the subject-matter of the proceedings arose.

• Marginal note:Certificate

  (5) For the purposes of subsection (4), a document purporting to have been issued by the Minister, certifying the day on which the evidence referred to in that subsection came to the knowledge of the Minister, shall be received in evidence as conclusive proof of that fact without proof of the signature or official character of the person appearing to have signed the document and without further proof.

General

Marginal note:Minister may establish or approve forms

18 The Minister may establish or approve

• (a) forms of application for loans; and

• (b) forms of notes, agreements, certificates and other documents to be used in connection with loans or necessary or advisable for the effective operation of this Act.

Marginal note:Minister subrogated in lender’s rights

• 19 (1) Where under this Act the Minister has paid to a lender the amount of any loss sustained by the lender as a result of a loan, the lender shall execute a receipt in favour of the Minister in the form established or approved by the Minister and the Minister is thereupon subrogated in all rights of the lender in respect of the loan.

• Marginal note:Idem

  (2) Without limiting the generality of subsection (1), the subrogation mentioned in that subsection vests in the Minister all rights and powers of the lender in respect of the loan, any judgment concerning the loan obtained by the lender and any security taken by the lender for the repayment of the loan, and the Minister is entitled to exercise all the rights, powers and privileges that the lender had or might exercise in respect of the loan, judgment or security, including the right to commence or continue any action or proceeding, to execute any release, transfer, sale or assignment or in any way to collect, realize or enforce the loan, judgment or security.

• Marginal note:Receipt evidence of payment

  (3) Any document purporting to be a receipt in the form approved by the Minister and purporting to be signed on behalf of the lender is evidence of the payment by the Minister to the lender under this Act in respect of the loan therein mentioned and of the execution of that document on behalf of the lender.

Marginal note:Repossession and disposal of securities

20 The Minister may enter into an agreement on such terms and conditions as the Minister may deem advisable with a lender or with any person engaged in the manufacture or distribution of tools, implements, apparatus, machinery or machines, whether or not of a kind that is usually affixed to real property, or of any supplies or materials that may be utilized in the making of any improvements to a farm or farm products marketing cooperative pursuant to a loan, or with both any such lender and any such person, to provide for the repossession or disposal of any property on which security is taken by the lender for the repayment of a loan.

Marginal note:Payments out of C.R.F.

21 Any amount payable by the Minister to a lender under this Act and any amount necessary to meet the expenses incurred in the administration of this Act may be paid out of the Consolidated Revenue Fund.

Marginal note:Annual report

• 22 (1) The Minister shall, not later than June 30 in each year, prepare a report with respect to the administration of this Act and the Farm Improvement Loans Act during the fiscal year that ended on the preceding March 31 and shall cause a copy of the report to be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the day the Minister completes it.

• Marginal note:First report

  (2) The report to be prepared not later than June 30, 1988 shall cover

  • (a) the administration of this Act during the period that begins on the day on which sections 2 to 21 come into force and ends on March 31, 1988; and

  • (b) the administration of the Farm Improvement Loans Act during the period that began on January 1, 1987 and ends on March 31, 1988.

Related Amendments

23 to 25 [Amendments]

Consequential Amendments

26 to 32 [Amendments]

Coming into Force

Marginal note:Coming into force

• Footnote ^*33 (1) This Act, other than sections 1 and 22 to 25, shall come into force on a day to be fixed by proclamation.

  • Return to footnote ^*[Note: Act, other than sections 1 and 22 to 25, in force February 1, 1988, see SI/88-31.]

• Marginal note:Idem

  (2) Sections 1 and 22 to 25 shall come into force or be deemed to have come into force on July 1, 1987.